How is the balance of trade in goods calculated?

It is the value of exports of goods minus the value of imports of goods.

A country exports £320 billion of goods and £280 billion of services, and imports £400 billion of goods and £215 billion of services. Calculate the overall trade balance.

The trade balance is a deficit of £15 billion.

Name the two components of the current account other than trade in goods and services.

Primary income, which is interest, profit and dividends flowing between countries, and secondary income, which is transfers such as aid and remittances.

Edexcel A-Level Economics B 9EB0

Scarcity, Choice and Potential Conflicts

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Enterprise, Business and the Economy

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Introducing the Market

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The Role of Credit in the Economy

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Life in a Global Economy

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Globalisation

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Life in a Global Economy

Visible and invisible trade and the impact of cheap imports

3 things to know
Papers 2 and 3

Overview

Visible and invisible trade, the balance of trade in goods, the pattern of UK trade and calculating the overall trade balance, the other current account components, how cheap imports raise living standards and help manufacturers, their costs to the domestic economy, dumping, and inflation targets.

What you need to know

Answer each one before you reveal it.

Your recallNot started

Key term

What are visible exports?

Key term

What are invisibles in international trade?

Key term

Describe the typical pattern of UK trade in goods and services.

Questions from this subtopic

Each one with the model answer underneath.

1
What are visible exports?
Model answer
Visible exports are physical goods sold to buyers in other countries, such as cars, machinery and oil.
2
What are invisibles in international trade?
Model answer
Invisibles are traded services, such as banking, insurance, tourism, education and consultancy.
3
How is the balance of trade in goods calculated?
Model answer
It is the value of exports of goods minus the value of imports of goods.
4
Describe the typical pattern of UK trade in goods and services.
Model answer
The UK runs a persistent deficit on trade in goods and a surplus on trade in services, particularly financial and business services.
5
A country exports £320 billion of goods and £280 billion of services, and imports £400 billion of goods and £215 billion of services. Calculate the overall trade balance.
Model answer
The trade balance is a deficit of £15 billion.
6
Name the two components of the current account other than trade in goods and services.
Model answer
Primary income, which is interest, profit and dividends flowing between countries, and secondary income, which is transfers such as aid and remittances.

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Scarcity, Choice and Potential Conflicts

Enterprise, Business and the Economy

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The Role of Credit in the Economy

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ABorrowing becomes dearer and saving more rewarding.

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