Meaning of Balance of Payment - SS3 Economics Past Questions and Answers - page 1
What does the balance of payment record?
All financial transactions made between a country and the rest of the world
Only financial transactions related to imports
Only financial transactions related to exports
Financial transactions made within a country
What is the current account component of the balance of payment?
Records all transactions related to the purchase and sale of assets
Records all international transactions related to the trade of goods and services, income, and current transfers
Records all transactions related to foreign direct investment
Records all transactions related to loans
What is the capital account component of the balance of payment?
Records all international transactions related to the trade of goods and services, income, and current transfers
Records all transactions related to the purchase and sale of assets
Records all transactions related to foreign direct investment
Records all transactions related to loans
What does a current account deficit indicate?
A country is relying too much on imports and not producing enough for export
A country is attracting enough foreign investment to support its economic growth
A country is exporting more goods and services than it imports
A country is not investing enough in other countries
What is the importance of the balance of payment?
Provides insight into a country's economic health and its level of international financial transactions
Records all transactions made within a country
Provides insight into a country's level of domestic transactions
Records only financial transactions related to exports
What does a capital account deficit indicate?
A capital account deficit may indicate that a country is not attracting enough foreign investment to support its economic growth.
Why is the balance of payment important?
The balance of payment is important because it provides insight into a country's economic health and its level of international financial transactions.