What this practice covers
These questions are drawn from past CIE 9708 papers and filtered to policies to correct imbalances in the current account. You answer, you find out immediately whether you were right, and you get the reasoning for the correct option and for each distractor. Wrong answers go to a mistakes locker so you can come back to exactly those.
Practice is free. You need an account only so your progress and your mistakes are still there next time.
Start practising Paper 1 MCQs →
What examiners see students get wrong here
These are the errors that cost marks on policies to correct imbalances in the current account, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.
- “Current-account stability means zero”. A stable position need not be exactly balanced every year.
- Treating every deficit as harmful. The cause, use of resources, size and persistence matter.
- Using the whole balance of payments. AS Topic 6.5 focuses on the current account, not detailed financial- and capital-account accounting.
- Assuming higher interest rates must improve the current account. Lower import demand can be offset by appreciation and weaker exports.
- Assuming lower government spending increases exports. It may reduce imports, but it does not automatically create export demand or capacity.
- Treating protectionism as costless. Retaliation, imported-input costs, inflation and efficiency losses may offset the benefit.
- Treating supply-side policy as immediate. Its major effects are often long term.
- Using devaluation, Marshall–Lerner or the J curve as compulsory AS analysis. Exchange-rate policy belongs to A Level Topic 11.1, while Marshall–Lerner and J-curve analysis belong to A Level Topic 11.2.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: Policies to Correct Imbalances in the Current Account revision notes.