(a) Calculate the percentage change in the United States current account deficit on the balance of payments between 1998 and 2006 - Edexcel - A-Level Economics A - Question 3 - 2018 - Paper 2

The current account of the balance of payments is a comprehensive measure that reflects the economic transactions between a country and the rest of the world over a specific period. It includes:

1. Total value of exports and imports:

   • It measures the total value of exports of goods and services, subtracting the total value of imports.

2. Components of the current account:

   • Trade in goods
   • Trade in services
   • Primary income (income earned abroad minus payments to foreign investors)
   • Secondary income (transfers like remittances)

Overall, a country’s current account balance indicates if it is a net creditor or debtor to the rest of the world.

The correct answer is C) There was a current account deficit for the entire period shown.

• Explanation of options:
  • A is incorrect because the deficit increased over this period.
  • B is incorrect as there has never been a surplus during this time.
  • D is incorrect for the same reason as B.