Balance of trade and balance of payment. - SS1 Commerce Past Questions and Answers - page 1
What does the balance of trade specifically focus on?
All economic transactions between countries
Trade in goods between countries
Trade in services between countries
Which component of the balance of payments includes income flows and trade in goods and services?
Current account
Capital account
Financial account
What does a trade surplus indicate?
Imports exceed exports
Exports exceed imports
The balance of trade is zero
What does the balance of payments include that the balance of trade does not?
Trade in goods only
Income flows and financial transfers
Financial investments only
Explain the meaning of a trade deficit in the balance of trade.
A trade deficit in the balance of trade occurs when a country's imports exceed its exports, indicating that it is buying more goods from other countries than it is selling to them.
Describe one component of the balance of payments other than the current account or the capital account.
One component of the balance of payments is the financial account, which tracks changes in ownership of financial assets and liabilities, including foreign direct investment, portfolio investment, and changes in reserve assets held by the central bank.