Meaning of Balance of Payment - SS3 Economics Past Questions & Answers - page 1

1

What does the balance of payment record?

A

All financial transactions made between a country and the rest of the world

B

Only financial transactions related to imports

C

Only financial transactions related to exports

D

Financial transactions made within a country

 

CORRECT OPTION: a
2

What is the current account component of the balance of payment?

A

Records all transactions related to the purchase and sale of assets

B

Records all international transactions related to the trade of goods and services, income, and current transfers

C

Records all transactions related to foreign direct investment

D

Records all transactions related to loans

 

CORRECT OPTION: b
3

What is the capital account component of the balance of payment?

A

Records all international transactions related to the trade of goods and services, income, and current transfers

B

Records all transactions related to the purchase and sale of assets

C

Records all transactions related to foreign direct investment

 

D

Records all transactions related to loans

CORRECT OPTION: b
4

What does a current account deficit indicate?

A

 A country is relying too much on imports and not producing enough for export

B

A country is attracting enough foreign investment to support its economic growth

 

C

A country is exporting more goods and services than it imports

D

A country is not investing enough in other countries

CORRECT OPTION: a
5

What is the importance of the balance of payment?

A

Provides insight into a country's economic health and its level of international financial transactions

B

Records all transactions made within a country

 

C

Provides insight into a country's level of domestic transactions

D

Records only financial transactions related to exports

CORRECT OPTION: a
6

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.

7

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.

 

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