Paper 2 · Exchange Rates and International Trade

The following figures are based on a country's balance of payments account. Visible imports: $2 000m Visible exports:$ 3 000m Shipping: $-20m Travel and tourism:$ -70m Interest, dividends and profits: $+20m Immigrants funds:$ -8m Government: $-100m The overall balance on current account is

A+$1 000m

B+$822m

C-$198m

D-$178m

Explanation: Visible balance = exports - imports = 3000 - 2000 = +1000. Invisible balance = -20 (shipping) - 70 (travel/tourism) + 20 (interest/dividends/profits) - 8 (immigrants' funds) - 100 (government) = -178. Current account = visible + invisible = 1000 - 178 = +822, i.e. option B.

ZIMSEC Economics Paper 2, June 2009, Q35

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