Current account of the balance of payments
6.3What the syllabus asks of you
- components of the current account of the balance of payments: current account: trade in goods, trade in services, primary income and secondary income
- components of the current account of the balance of payments: definition of balance and imbalances (deficit and surplus) in the current account of the balance of payments
- calculation of: balance of trade in goods
- calculation of: balance of trade in services
- calculation of: balance of trade in goods and services
- calculation of: current account balance (CAB)
- causes of imbalances in the current account of the balance of payments
- consequences of imbalances in the current account of the balance of payments for the domestic and external economy
Drill this topic
Every question on Current account of the balance of payments, untimed, marked as you go.
Make a worksheet
Choose the years and how many questions, then print it with the answers on separate pages.
47 questions
1May / June 2026 · Paper 11 · Q29Show mark scheme →
Adeficit of $10bn
Bdeficit of $50bn
Csurplus of $25bn
Dsurplus of $30bn
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2May / June 2026 · Paper 13 · Q27Show mark scheme →
AIt improves the balance of trade in goods.
BIt improves the balance of trade in services.
CIt worsens the balance of trade in goods.
DIt worsens the balance of trade in services.
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3Oct / Nov 2025 · Paper 11 · Q29Show mark scheme →
Aincome earned outside the country that is transferred into the country
Bvalue of food and raw materials produced and consumed within the country
Cvalue of food and raw materials that are exported
Dvalue of telecommunications services that are imported
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4Oct / Nov 2025 · Paper 13 · Q27Show mark scheme →
Adividends received by a Pakistani resident from shares in a domestic firm
Bprofits of Pakistani businesses exporting goods
Crent received by a Pakistani resident from a property in another country
Dsalary received by a Pakistani engineer from a foreign-owned producer operating in Pakistan
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5May / June 2025 · Paper 11 · Q29Show mark scheme →
Aprimary income: government transfers; secondary income: income from profits earned abroad
Bprimary income: income from profits earned abroad; secondary income: dividends earned on foreign shares
Cprimary income: income from profits earned abroad; secondary income: government transfers
Dprimary income: workers' remittances; secondary income: income from profits earned abroad
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6May / June 2025 · Paper 12 · Q27Show mark scheme →
Aa low domestic savings rate
Ban undervalued exchange rate
Chighly protectionist policies by other countries
Dlow investment income from abroad
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7May / June 2025 · Paper 13 · Q27Show mark scheme →
Aan appreciation of the exchange rate
Ban increase in domestic productivity
Can introduction of import quotas
Da rise in subsidies to domestic firms
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8Feb / March 2025 · Paper 12 · Q28Show mark scheme →
AEvent 1: a global recession resulting in decreased prices of commodities; Event 2: Gross National Income (GNI) rises faster than Gross Domestic Product (GDP)
BEvent 1: increased subsidies for exporters; Event 2: increased donations received from abroad to combat a humanitarian crisis
CEvent 1: removal of restrictions on imports; Event 2: removal of restrictions on the remittance of profits of foreign-owned producers
DEvent 1: rising imports of machinery to help raise exports in the future; Event 2: increased secondary income from workers' remittances from abroad
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9Feb / March 2025 · Paper 32 · Q22Show mark scheme →
Aa decrease in tax revenue
Bexport-led growth
Crepayment of debts to other countries
Dthe import of new technology
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10Oct / Nov 2024 · Paper 11 · Q24Show mark scheme →
Aincreasing domestic unemployment
Bincreasing domestic rate of income tax
Cincreasing domestic inflation
Dincreasing import tariffs
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11Oct / Nov 2024 · Paper 11 · Q28Show mark scheme →
Aaid received from the government of another country
Bexports of raw materials
Cinvestments by a foreign company
Dpayments of dividends to an overseas investor
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12Oct / Nov 2024 · Paper 12 · Q29Show mark scheme →
A–$223 million
B–$217 million
C+$208 million
D+$247 million
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13Oct / Nov 2024 · Paper 13 · Q25Show mark scheme →
AThe balance of payments account must always balance.
BForeign direct investment might help to finance the deficit.
CThe country may have a larger surplus on the other parts of its balance of payments account.
DThe standard of living is increased if the level of cheap food imports is significant.
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14Oct / Nov 2024 · Paper 13 · Q27Show mark scheme →
Aa recession in the domestic economy
Ba relatively high rate of inflation
Can undervalued exchange rate
Dhigh labour productivity
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15Oct / Nov 2024 · Paper 32 · Q26Show mark scheme →
Aa credit in the capital account
Ba credit in the current account
Ca debit in the capital account
Da debit in the current account
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16May / June 2024 · Paper 11 · Q29Show mark scheme →
Aa deficit of $2340m
Ba deficit of $2000m
Ca surplus of $2340m
Da surplus of $2000m
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17May / June 2024 · Paper 13 · Q26Show mark scheme →
Aan inflow of funds to Jamaica to buy shares
Bearnings from US tourists visiting Jamaica
Cearnings of Haitian workers in Jamaica sent to Haiti
Dthe export of Jamaican coffee
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18Feb / March 2024 · Paper 12 · Q27Show mark scheme →
A–$10bn
B–$15bn
C–$30bn
D–$50bn
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19Feb / March 2024 · Paper 12 · Q28Show mark scheme →
A2015–2016
B2016–2017
C2017–2018
D2018–2019
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20Feb / March 2024 · Paper 12 · Q30Show mark scheme →
AConsumer spending is low.
BPrimary incomes in the form of investment income are low.
CThe rate of exchange is high.
DWage costs of production are high.
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21Feb / March 2024 · Paper 32 · Q27Show mark scheme →
ADeclining sales of German cars for export overseas.
BFalling earnings of foreign exchange from visitors to Germany.
CIncreasing transfers of aid to less developed countries.
DInvestment in a natural gas pipeline link to its main foreign supplier.
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22Oct / Nov 2023 · Paper 11 · Q22Show mark scheme →
Aexports of services
Binterest on foreign loans
Cprofits from foreign investments
Dthe purchase of foreign assets
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23Oct / Nov 2023 · Paper 11 · Q26Show mark scheme →
Aa fall in secondary income for India
Ban increase in the balance of trade in services for Kenya
Can increase in the current account surplus for India
Dan increase in primary income for Kenya
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24Oct / Nov 2023 · Paper 12 · Q25Show mark scheme →
ADemand for domestically produced goods has risen.
BDomestic inflation has risen faster than the inflation of its major trading partners.
CDomestic unemployment has risen.
DThe exchange rate has depreciated.
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25Oct / Nov 2023 · Paper 12 · Q28Show mark scheme →
Asecondary income; inflow
Bsecondary income; outflow
Ctrade in services; inflow
Dtrade in services; outflow
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26Oct / Nov 2023 · Paper 13 · Q21Show mark scheme →
Atrade in goods ✓, current transfers ✓, employment income from abroad ✓
Btrade in goods ✓, current transfers ✗, employment income from abroad ✗
Ctrade in goods ✗, current transfers ✓, employment income from abroad ✗
Dtrade in goods ✗, current transfers ✗, employment income from abroad ✓
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27Oct / Nov 2023 · Paper 13 · Q25Show mark scheme →
Aan undervalued exchange rate
Ba relatively low rate of inflation
Ca shrinking domestic economy
Da general fall in national productivity
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28May / June 2023 · Paper 11 · Q29Show mark scheme →
Aaggregate demand: fall; balance of payments on goods and services: improve
Baggregate demand: fall; balance of payments on goods and services: worsen
Caggregate demand: rise; balance of payments on goods and services: improve
Daggregate demand: rise; balance of payments on goods and services: worsen
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29May / June 2023 · Paper 12 · Q17Show mark scheme →
AExported services were valued at over US$477 428.
BImported goods were valued at over US$1 632 639.
CThe value of exported services was less than the value of exported goods.
DThere was an overall current account deficit.
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30May / June 2023 · Paper 12 · Q28Show mark scheme →
Aan increase in subsidies to exporters
Ban increase in the tariffs on imports
Ca reduction in the number of migrant workers allowed into the country
Da reduction in overseas aid donations
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31May / June 2023 · Paper 13 · Q17Show mark scheme →
Aas part of the balance of trade in services
Bas part of net primary income
Cas part of net secondary income
Das part of the financial account
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32Oct / Nov 2022 · Paper 11 · Q23Show mark scheme →
ACanada exported more goods than Singapore.
BCanada and Singapore had current account deficits.
CSingapore had a surplus on its trade in goods and services.
DSingapore imported cheaper goods than Canada.
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33Oct / Nov 2022 · Paper 11 · Q26Show mark scheme →
Aan increase in government foreign aid to countries abroad
Ban increase in government tax rates
Can increase in other countries' exchange rates
Dan increase in the proportion of income saved by the country's residents
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34Oct / Nov 2022 · Paper 13 · Q25Show mark scheme →
Adevelopment aid for foreign countries
Bexport revenue from primary commodities
Cincome from foreign tourists
Dincome from overseas investments
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35May / June 2022 · Paper 11 · Q25Show mark scheme →
Aexports / imports / trade balance
Bexports / trade balance / imports
Cimports / exports / trade balance
Dimports / trade balance / exports
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36May / June 2022 · Paper 13 · Q22Show mark scheme →
A126 000
B142 000
C234 000
D237 000
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37May / June 2022 · Paper 14 · Q19Show mark scheme →
Aa rise in export and import prices
Ba rise in foreign aid flows
Ca rise in international exchange rates
Da rise in foreign direct investment
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38Feb / March 2022 · Paper 12 · Q24Show mark scheme →
Athe balancing item
Bthe export of services
Cthe import of goods
Dthe interest received from investment overseas
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39Feb / March 2022 · Paper 32 · Q28Show mark scheme →
A+150 –150
B+150 –400
C+250 –150
D+250 –400
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40Oct / Nov 2021 · Paper 11 · Q24Show mark scheme →
Aadopt a fixed exchange rate
Battract more foreign direct investment
Cdecrease income tax rates
Dlower the rate of interest
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41Oct / Nov 2021 · Paper 11 · Q25Show mark scheme →
Apurchase: capital account; dividend: primary income (income)
Bpurchase: capital account; dividend: secondary income (current transfers)
Cpurchase: financial account; dividend: primary income (income)
Dpurchase: financial account; dividend: secondary income (current transfers)
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42Oct / Nov 2021 · Paper 11 · Q29Show mark scheme →
Aan appreciation of Guatemala’s currency
Ba growth of household incomes in Guatemala
Ca lowering of tariffs on goods imported into Guatemala
Dproductivity improvements in Guatemala’s export sector
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43Oct / Nov 2021 · Paper 12 · Q21Show mark scheme →
AExchange rate changes will correct any deficit or surplus.
BOne country's deficit is balanced by another country's surplus.
CThe current account is balanced by the capital and financial accounts.
DThe government must act to correct any disequilibrium.
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44Oct / Nov 2021 · Paper 13 · Q27Show mark scheme →
Aa fall in the rate of economic growth
Ba fall in the foreign currency reserves
Ca fall in the number of unemployed
Da fall in the rate of inflation
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45May / June 2021 · Paper 12 · Q23Show mark scheme →
A–3900
B–2000
C–1900
D5700
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46May / June 2021 · Paper 12 · Q26Show mark scheme →
Aa decline in the deficit in the trade account
Ba decline in the level of savings
Ca decline in the terms of trade
Da decline in unemployment
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47Feb / March 2021 · Paper 12 · Q25Show mark scheme →
Aforeign aid by China to assist in infrastructure projects in African countries
Binvestments by Middle Eastern oil producing countries through the purchase of land and property assets in Europe
Cpayments by the USA to other countries which house American military bases
Dprofits and dividends paid by multinational companies based in Indonesia to shareholders in Asia
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