O Levels Economics (2281)•2281/13/O/N/24
Explanation
Net effect of current account credits and debits Steps:
- Credit goods exports by Country X: +$200m
- Debit services imports by Country X from Country Y: -$50m
- Debit unilateral transfer for remittances sent by Y's workers from X: -$25m
- Debit unilateral transfer for aid sent by X to Y: -$75m
- Net change: 50m - 75m = +$50m Why A is correct:
- Current account balance reflects exports (credits) minus imports and transfers (debits), netting +$50m here per balance of payments standards. Why the others are wrong:
- B: Omits services import debit, yielding 25m - 100m
- C: Includes only goods export credit, ignoring all debits
- D: Treats imports and transfers as credits, incorrectly summing all values Final answer: A
Topic: Current account of balance of payments
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