Economics Paper 2, WASSCE (SC), 2018

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

  1. Calculate the value of visible exports.
  2. Calculate the balance of trade for the country.
  3. List the items of invisible exports and imports.
  4. Calculate the current account balance of the country.
  5. Is the country developed or developing? Give one reason for your answer.

  Observation

 

This is one of the data response question and it was attempted by few candidates. The question required the candidates to calculate the value of visible exports, balance of trade, current account balance of a country, list the items of invisible exports or imports of a country and determine if the country is developed or developing. Most candidates who attempted this question were able to calculate the value of visible exports and the current account balance but were unable to calculate the balance of trade and list the items of invisible export as they could not classify ‘bauxite’ as either visible export or import, hence they could not obtain the maximum mark.
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.