Social Science (087) — AI-generated practice question

Britain had a trade surplus with India because it exported more goods to India than it imported. Britain used this surplus to balance its trade deficits with other countries — countries from which Britain imported more than it exported. This is called a multilateral settlement system, where a deficit with one country is settled using a surplus earned from a third country. Thus, India's trade surplus effectively subsidised Britain's global trade relationships, making India crucial to the late-nineteenth-century world economy.

Source: Chapter 3, Section 2.6 — Indian Trade, Colonialism and the Global System

---

• The key term examiners expect is "multilateral settlement system" — define it briefly.
• Clearly state the mechanism: surplus with India → offset deficits elsewhere.
• Avoid mixing in unrelated points (e.g., home charges) unless marks allow; here 3 marks = focus tightly on one mechanism.
• The passage directly provides this answer, so quote or closely paraphrase it.