6.3 Current account of the balance of payments

b) Assess whether an improvement in the terms of trade or a surplus on the current account of the balance of payments is of more benefit to an economy. [12]

b) Assess whether an economy will always benefit from having a surplus on the current account of its balance of payments. [12]

b) Assess whether contractionary fiscal policy is likely to be the best way to reduce a current account deficit on the balance of payments. [12]

a) Explain how import tariffs might correct an imbalance in the current account of the balance of payments and consider whether these tariffs are the best way of correcting such an imbalance. [8]

b) A country has a persistent deficit on the current account of its balance of payments. Assess the likely consequences for the domestic and external economy of this country. [12]

b) Discuss whether protectionist policies would be the most effective way to correct a current account deficit on the balance of payments in an economy. [12]

An economy moves from a deficit to a surplus on the current account of the balance of payments.

a) Explain what is meant by a surplus on the current account of the balance of payments and consider the possible impact on the level of employment and prices when there is a change from a deficit to a surplus current account balance in an economy. [8]

a) Explain why some countries consistently have a deficit on the current account of the balance of payments. [8]