Question 1
The table below shows the composition of exports and imports of a hypothetical country.
Use the information in the table to answer the questions that follow.
Exports |
Amount |
Imports |
Amount |
Crude oil |
120,000,000 |
Rice and flour |
140,000,000 |
Groundnuts |
40,000,000 |
Petroleum product |
80,000,000 |
Tourism |
45,000,000 |
Vehicles and accessories |
50,000,000 |
Shipping & Insurance |
60,000,000 |
Banking services |
60,000,000 |
Bauxite |
80,000,000 |
Freight and insurance |
40,000,000 |
- Calculate the value of visible exports.
- Calculate the balance of trade for the country.
- List the items of invisible exports and imports.
- Calculate the current account balance of the country.
- Is the country developed or developing? Give one reason for your answer.
The candidates were expected to provide the following answers to score higher marks.
(a) Value of visible exports = crude oil + groundnuts + bauxite
= $120,000,000 + $ 40,000,000 + $ 80,000,000 = $ 240,000,000
(b) Balance of trade = total value of visible exports – total value of visible imports
Visible exports = $240,000,000
Visible imports = rice and flour + petroleum product + vehicles and
accessories
= $ 140,000,000 + $ 80,000,000 + $ 50,000,000
= $ 270,000,000
Balance of trade = $ 240,000,000 - $ 270,000,000
= - $ 30,000,000
(c) Invisible exports include tourism and shipping & insurance.
Invisible imports include banking services and freight & insurance.
(d) Current account balance = value of total exports – value of total imports
= ($ 345,000,000) – ($ 370,000,0000)
= - $ 25,000,000
(e) The country is a developing one.This is because:
(i) its exports are made up mainly of unprocessed primary products.
(ii) its imports are made up mainly of finished goods.
(iii) the value of imports exceeds exports.