Explain the difference between the terms of trade and the balance of trade in goods and consider whether an economy should be more concerned about its terms of trade than its balance of trade in goods.
Exam No：9708_w23_qp_22 Year：2023 Question No：4(a)
Answer:
Knowledge points:
6.3.1.1 current account: trade in goods, trade in services, primary income and secondary income
6.3.1.2 definition of balance and imbalances (deficit and surplus) in the current account of the balance of payments
6.3.2.1 balance of trade in goods
6.3.2.2 balance of trade in services
6.3.2.3 balance of trade in goods and services
6.3.2.4 current account balance (CAB)
6.3.3 causes of imbalances in the current account of the balance of payments
6.3.4 consequences of imbalances in the current account of the balance of payments for the domestic and external economy
Solution:
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