The graph in Fig. 2 shows the values of visible imports and visible exports for Country X during the period 2006 to 2011. [Figure 2] Use the information given in Fig. 2 to help you to answer the following questions.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2012). The mark or mark type is shown in brackets.

1. [1] (a) (i) 2007 or 2010
2. [2] (a) (ii) visible exports $7m – visible imports $3m (1 mark) = $4m (1 mark) OFR applies. If the correct answer is given without working, award full marks.
3. [2] (b) Any one point x 1 mark and 1 mark for example - goods/products/items that can be seen, and are sent out of the country, such as cars/clothing/oil/coal/toys (1 example maximum), any other relevant point
4. [6] (c) Level 2 (4-6 marks) Has commented on the changes in the Balance of Trade figures and has given a reasoned answer as to whether or not the government should be concerned about the figures. In the six years shown on the graph, the visible imports have declined by 50% between 2006 and 2009 and then have risen back sharply to their 2006 figure i.e. $6m in 2011. At the same time visible exports which were low in 2006, reached their highest point in 2009, $7m, but have declined in value in the last two years to $4m. Consequently the balance of trade, the difference between visible imports and exports has changed considerably in these six years. In 2006 imports exceeded exports, in 2007 there was equilibrium but in 2009 there was a substantial surplus of $4m. Unfortunately this was not sustained and the Balance of Trade in 2011 showed a deficit of $2m. The government may well be concerned about these figures especially the most recent deficit. However, the figures do seem to fluctuate from year to year and it is possible that exports may be increasing in 2012 – we do not know. If the Balance of Trade continues to get worse, then the government must be concerned and will need to take action. Level 1 (1-3 marks) Has made some comment on the figures in Fig. 2 with/without any comment on the government and the figures. The figures show many changes. The country imported goods to the value of $3m in 2009 exported $7m worth of goods. This was good. In 2011 exports have gone down and imports have increased. The government should be concerned.
5. [4] (d) Any two ways explained x 2 marks - government gives encouragement to companies to export more – export subsidies, government encourages a stable economy so that importers feel that it is less risky to import from a particular country, country joins a trading bloc – making it easier to trade within a group of countries, encouragement of companies that develop new products that have worldwide appeal, government encouragement of companies that expand to explore new markets – multinationals, governments offering inward investment to companies locating in the country and producing for export, new sources of raw materials are found that are in demand from other countries e.g. oil, any other relevant way NB Beware of comment on companies increasing their exports.
6. [2] (e) (i) Any two points x 1 mark each - balance of payments relates to services as well as goods, balance of payments also includes interest/profit/dividends/borrowing, balance of payments consists of a current account and a capital account, any other relevant difference
7. [3] (e) (ii) Any 3 ways x 1 mark and up to 3 marks for any well explained point - collect statistics of imports and exports – enabling government to assess trends, assessing and collecting import duties, imposing the measures taken by government to reduce a Balance of Payments deficit e.g. operating quotas, embargoes, licences, supervising the operation of the re-export trade, any other relevant point