CT7 Past exam - Oct 2011 Q36

[msmat999]

Just wondering if someone can help.

In the 5th Oct 2011 paper in Q36 you are given the following information:

1) Exports of goods £200m
2) Imports of goods -£250m
3) Exports of services £100m
4) Imports of services -£150

and you are asked to calculate the ‘value of the balance of trade’.

To me this question is not very clear as you can have a balance of trade in goods, balance of trade in services and a balance of trade in goods & services.

Am I correct in thinking that it could actually be all 3? I calculated it for goods & services but the solution was just goods.

Thanks

 

[Anna Walklate]

According to the textbook, the balance of trade is defined as total net exports of goods and services, so the answer to this question is a deficit of £100m.

However, you're right that sometimes balance of trade could be taken to mean just total net exports of goods, and in this instance, the examiners did actually accept the answer being a deficit of £50m too.

I don't think we'd usually take the term "balance of trade" to refer to just services.