Balance of payments

Table 1

100

What is balance of payments?

it is a summary of the payment and receipts of transactions between a country and the rest of the world. 

200

What are the impacts of a surplus?

Falling unemployment, Increase in reserves, exchange rate appreciation, and inflationary pressures. 

300

In order to calculate Invisible we use export and import of goods or services?

We use exports and Imports of services.

400

When Exports exceed imports it is know as a 

Deficit 

500

Calculation:

Calculate the visible: Imports 670

                               Exports 890

Exports - Imports = Visible 

890 - 670 = 220

Table 2

100

When Inflows exceed outflows it is known as a

positive cash flow

200

What are impacts of deficit?

Unemployment might increase, falling foreign, exchange reserves, and exchange rate depreciation. 

300

What are some measures that can help reduce a deficit? 

Reduction of aggregate demand through deflationary monetary and fiscal policy, Import controls, devaluations. 

400

What are official reserves? 

They are the government store of foreign currency held by the central back of the country.

500

What are the three types of import controls that are used to reduce a deficit? 

Embargo, quotas, and tariff.

Table 3

100

What is the Current Account Balance in the Balance of Payments?

it is the sum of balance of trade, net factor income, and net transfer payments.

200

Define Capital Account Balance and its significance in the Balance of Payments.

It is a component of the Balance of Payments that records the flow of financial assets between a country and the rest of the world.

300

What is the significance of a country's current account balance in relation to its trade balance?

The current account balance is directly affected by the trade balance, as a surplus in the trade balance leads to a positive current account balance.

400

How is a Balance of Payments surplus different from a deficit?

A surplus is when exports exceed imports, while a deficit is when imports exceed exports.

500

When they are foreign exchange flows into the country these are called

Inflows 

Table 4

100

What is a direct ban on the importation of a particular good called?

Embargo

200

Export and import of goods is also known as

Visible trade 

300

Balance on "Balance of Trade" can be 

a. Surplus 

b. Deficit 

c. All of the above 

The answer is C all of the above 

400

Balance of trade is measured as

The difference between import and export of goods or services

500

How does a negative Trade Balance affect a country's currency value?

A negative Trade Balance depreciates a country's currency value.

Table 5

100

Is a LIMIT on the AMOUNT of a good that can be imported.

Quota 

200

What does it mean when the value of the currency falls?

Devaluation 

300

 The ‘resident’, whose monetary transactions get recorded under the Balance of Payments system, includes

a. Government agencies

b. Individuals

c. Firms

d. All of the above 

d. All of the above

400

what does it mean when inflows equals to outflows?

Balance of Payments in Equilibrium.

500

Is the summary of payments and receipts of all transaction between a country and the world.

Balance of Payments