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Cambridge IGCSE Economics practice

Paper 2 structured question: Current account of balance of payments

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Current account of balance of payments

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Paper 2Structured Questions2 marks

The country of X has been experiencing a current account deficit for several years.

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Current Account Deficit in Country X

Country X has been importing more goods and services than it exports, leading to a significant current account deficit. This situation has raised concerns about the potential impacts on the economy.

  1. a

    Explain the potential effects of a current account deficit on GDP and employment in Country X.

    Aim for approximately 2 distinct marking points.

    [2]

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Paper 2 structured question: Current account of balance of payments

Paper 2Structured Questions2 marks

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Current Account Surplus in Country Y

Country Y has been exporting more than it imports, resulting in a current account surplus. This has contributed to economic growth and increased employment.

  1. a

    Discuss the implications of a current account surplus for inflation and exchange rates in Country Y.

    Aim for approximately 2 distinct marking points.

    [2]