Balance of Payments Quiz

What does the Balance of Payments (BOP) record?

• Only government financial transactions

• Only exports and imports

• All international financial transactions

• Only domestic financial transactions

Which of the following is NOT a main category of the BOP?

• Trade account

• Financial account

• Capital account

• Current account

What is included in the current account?

• Only capital transfers

• Goods and services, income, and unilateral transfers

• Only services

• Only goods

What does a trade surplus indicate?

• High inflation

• Equal imports and exports

• Exports exceed imports

• Imports exceed exports

What is the balance of trade (BOT)?

• The difference between government spending and revenue

• The difference between imports and exports

• The total value of domestic savings

• The total value of foreign investments

What happens when a country has a current account deficit?

• It has a trade surplus

• It borrows money to fund the deficit

• It exports more than it imports

• It experiences economic growth

What is the capital account primarily concerned with?

• Trade of goods and services

• Domestic investments

• International capital transfers

• Government spending

Which of the following is a component of the financial account?

• Government-owned assets

• Unilateral transfers

• Trade of merchandise

• Income from tourism

What can cause disequilibrium in the BOP?

• Excessive foreign investment

• Imbalance between imports and exports

• Balanced trade

• Stable exchange rates

What is one measure to correct disequilibrium in the BOP?

• Reducing foreign investments

• Devaluation of currency

• Increasing imports

• Increasing tariffs on exports