The Balance of Payments — AQA Past Paper Questions

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

2.6.3 The Balance of Payments

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

2.6.2 Trade · 2.6.3 The Balance of Payments

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.

2.6.3 The Balance of Payments · 2.6.2 Trade

Assess the view that a depreciation of the pound against other currencies is likely to improve the UK’s macroeconomic performance.

2.6.4 Exchange Rate Systems · 2.6.3 The Balance of Payments

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.

2.6.3 The Balance of Payments

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.

2.6.4 Exchange Rate Systems · 2.6.3 The Balance of Payments

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.

2.6.3 The Balance of Payments

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

2.6.3 The Balance of Payments