Balance of payments

Explain factors that affect the UK’s balance of trade in motor vehicles.

Table 2 shows the UK's balance of trade in goods and services in successive quarters.

What was the UK's median quarterly balance of trade over the period shown in Table 2?

Which one of the following would be classified as a debit item in the secondary income section of the current account of the UK balance of payments?

Explain how expenditure-switching policies can be used to reduce a deficit on a country’s balance of trade in goods and services.

Explain reasons for changes in the value of exports from the UK to the rest of the world.

Extract F (lines 7–8) states: ‘Economists said the data reinforced the view that the slump in South Korea’s trade-reliant economy would continue beyond this year’.

Using the data in the extracts and your knowledge of economics, evaluate policies which could be used to boost South Korea’s exports and increase its trade surplus.

Which one of the following is an expenditure switching policy that would help to reduce a deficit on the balance of payments on current account?

An increase in

Do not answer Context 2 if you have answered Context 1.

Using the data in Extract D (Figure 4), calculate how much was spent by the US on imports from China for every $1 it received from exports to China in 2018. Give your answer to two decimal places.

To what extent do you agree that reducing the budget deficit is more important to the UK’s macroeconomic performance than reducing the current account deficit on its balance of payments? Justify your answer.

The UK’s labour productivity increases by only 10% over a five year period. Over the same period its main trading partners increase their productivity by 25%. All other things being equal, the most likely consequence for the UK is

Extract B describes the trade figures as ‘disappointing’.

Explain how the data in Extract A (Figure 2) show that the UK’s trade performance has been ‘disappointing’ given the fall in the value of the pound since November 2015.

Extract C (lines 8–9) states ‘Trade deficits and surpluses may be self-correcting in a floating exchange rate system.’

With the help of a diagram showing the supply of and demand for a currency, explain how a floating exchange rate may help to correct a trade surplus.

Extract B (lines 19–21) states ‘Although some argue that a current account deficit is not a problem, others point to the worryingly large and persistent nature of the deficit.’

Using the data in the extracts and your knowledge of economics, assess the impact of a persistent current account deficit on the macroeconomic performance of the UK economy.

The table below shows selected components of the UK balance of payments on current account as a percentage of GDP between 2011 and 2014.

It can be concluded from the data that between 2011 and 2014 the main reason for the rise in the current account deficit as a percentage of GDP was

Evaluate the measures that might be taken to reduce a deficit on the current account of the UK’s balance of payments.