2014 Economics WAEC (WASSCE) Theory Past Questions (Paper 2)

Question 1

The table below shows an extract from balance of payments for country A. Use the table to answer the questions that follow: Balance of payments items

Calculate the:

(a) balance of trade

Solution

Balance of Trade = visible import – visible export 

∴ B.O.T = visible import – visible export 

= $52,000 – $40,000

= $12,000

(b) balance on current account

Solution

Balance on current account =  Receipt of items – payments of items 

Receipt of (visible /invisible goods) 

= $52,000 + 4,000 + 20,000 + 2,500 + 22,800

= $101300 

Payment of (visible /invisible goods) 

= $40,000 + 8,000 + 5,000 + 7,500 + 7,000 

= $67,500 

Balance on current A/C = $101300 – $67,500 = $33,800

(c) balance on capital account

Balance on capital account = Receipt of capital inflow – payment of capital outflow

Receipt of loan and investment = $50,000 + $254,000 + 221,000 = $525,000

Payment of loan and investment = $26,000 + $289,000 + $238,000 = $553,000

∴Balance on capital a/c = $525,000 – $553,000 = -$28,000

(d) balance of payment

Balance of payment = Balance on current a/c + Balance on capital a/c = 

$33,800 + (-$28,000) = $5,000