Social Science (087) — AI-generated practice question

Britain had a trade surplus with India because the value of British exports to India was much higher than the value of British imports from India. Britain used this surplus to balance its trade deficits with other countries — that is, countries from which Britain was importing more than it was selling to. This is called a multilateral settlement system, where one country's deficit with another country is settled by its surplus with a third country. Thus, India played a crucial role in supporting Britain's position in the late-nineteenth-century world economy.

Source: Indian Trade, Colonialism and the Global System, Chapter 3

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• The key concept here is multilateral settlement — examiners expect this term to appear in your answer.
• Remember the logic: India → surplus with Britain → Britain uses it to cover deficits elsewhere.
• Also note the secondary use: the surplus paid 'home charges' (pensions, remittances, debt interest) — you can add this for extra precision in a 3-mark answer.
• Avoid writing too broadly; stick to the trade surplus mechanism as described in the passage.