Balance of Payments and Balance of Trade Quiz
6 Questions
3 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the main difference between Balance of Trade and Balance of Payments?

  • Balance of Trade encompasses services and capital transfers, while Balance of Payments focuses solely on goods transactions.
  • Balance of Payments includes only exports and imports, while Balance of Trade includes services and capital transfers.
  • Balance of Payments only includes visible items, while Balance of Trade includes both visible and invisible items.
  • Balance of Trade only includes goods transactions, while Balance of Payments includes all economic transactions. (correct)

    • In an unfavorable Balance of Trade, which scenario is most likely?

  • Exports are increasing, but imports are decreasing.
  • Exports are decreasing, and imports are increasing. (correct)
  • Both exports and imports are increasing.
  • Both exports and imports are decreasing.

    • Which transactions are NOT recorded in the Balance of Payments?

  • Capital transfers
  • Goods
  • Invisible items (correct)
  • Services

    • What constitutes a favorable Balance of Payments?

    <p>When exports exceed imports, leading to a surplus.</p> Signup and view all the answers

    Which type of transactions does the Balance of Payments include besides goods and services?

    <p>Capital transfers and unilateral transfers</p> Signup and view all the answers

    What is the primary focus of the Balance of Trade compared to the Balance of Payments?

    <p>Goods transactions only</p> Signup and view all the answers

    Study Notes

    • Balance of Payments is being discussed within the context of various transactions a country engages in with the rest of the world.
    • The Balance of Trade refers to the difference between the value of a country's exports and imports of goods.
    • An unfavorable Balance of Trade occurs when a country's exports are lower and imports are higher.
    • The Balance of Payments records all economic transactions of a country with the rest of the world, including goods, services, unilateral transfers, and investments.
    • Capital transfers, like loans and investments, are also included in the Balance of Payments.
    • Visible items in the Balance of Payments include tangible goods like food, spices, and crude oil.
    • Invisible items, such as services like banking, teaching, consultancy, and tourism, are also recorded in the Balance of Payments.
    • Capital transfers involve the transfer of assets from one country to another, while unilateral transfers encompass gifts, donations, and charity.
    • A favorable Balance of Payments occurs when a country's exports exceed imports, resulting in a surplus.
    • Capital transfers, services, and goods transactions, when combined, form the Balance of Payments.

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Description

    Test your knowledge on the concepts of Balance of Payments and Balance of Trade, including their definitions, components, and implications for a country's economy.

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser