WorksheetsBalance of Payments: Current Account
Total questions: 10
Worksheet time: 10mins
Which of the following will be accounted for on the current account of an economy’s balance of payments?
Dividends from foreign investment
Sale of copyright
FDI
Short term flows of hot money
The chart shows the changes in the UK’s current account balance over a period of time.
Which of the following is most likely to have caused the deterioration between 2011 and 2015 in the UK’s Current Account balance?
A fall in the value of UK exports
A fall in the value of UK imports
The UK government sending more development aid to Syria
A significant rise in dividend payments flowing out of the UK
Which of the following would appear as a credit item in the UK balance of payments?
Dividend payments by Rolls Royce to Irish investors
Money sent by UK residents to their relatives abroad
Expenditure by the British Government in maintaining foreign embassies overseas
The expenditure of Japanese tourists on holiday in Britain
The current account on a country’s Balance of Payments is most likely to benefit from a depreciation of its currency when it is experiencing
price elastic demand for imports
full employment
price inelastic demand for exports
high interest rates
Imports into the UK are likely to rise as a result of
rising UK national income
UK prices rising more slowly than prices in other countries
households saving more of their income
the external value of Sterling decreases
Which of the following is regarded as a credit item on the UK’s current account on the Balance of Payments?
Investment by a Japanese car manufacturer in a factory in the UK
A loan from the IMF to the UK
Spending by Chinese tourists in London
The transfer of profits from Cadbury UK to its US parent company, Kraft Foods
If the economy is at full employment, which might be the effect of an increase in exports?
Higher inflation
Higher deflation
Higher employment
An increase in spare capacity
A country is running a persistent trade deficit. The most likely effect of this is to
reduce consumer spending on imported products
cause an appreciation in the value of the exchange rate
cause a rise in employment in export industries
reduce the level of aggregate demand
In 2010 the Brazilian central bank raised interest rates. What is likely to happen in the Brazilian economy?
The exchange rate will depreciate
The exchange rate will appreciate
The rate of inflation will accelerate
The rate of inflation will become negative
Between January and March 2019, the UK current account deficit widened by £6.3 billion to £30 billion, or 5.6% of GDP. When is a deficit on the current account of the balance of payments likely to worsen?
When the government devalues the currency
When prices of imported products that are demand-inelastic increase
When the government adopts a contractionary macro policy
When the incomes from overseas investment are higher than expected
