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Questions and Answers
What does the balance of payment contain a classified record of?
What does the balance of payment not include?
What does the balance of payment record for a country?
What is the period for which the balance of payments is usually prepared?
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How are economic transactions recorded in the balance of payments?
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What does a favorable or surplus position in the balance of payments indicate?
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What does the balance of payments show about a country's position in foreign trade?
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What does the balance of payments include?
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Study Notes
Balance of Payments
- Classified record of a country's international transactions with the rest of the world
- Records all transactions between a country's residents and non-residents
Exclusions
- Does not include transactions between residents
Country's Record
- Records credits and debits of a country's international transactions
- Includes transactions related to goods, services, income, and financial claims
Period
- Usually prepared for a year or a quarter
Transaction Recording
- Economic transactions recorded in the balance of payments using double-entry bookkeeping
- Debits represent outflows ofgoods, services, and income
- Credits represent inflows of goods, services, and income
Favorable Position
- A surplus or favorable position indicates that a country's exports exceed its imports
- Indicates a country's foreign exchange earnings are higher than its foreign exchange payments
Country's Position in Foreign Trade
- Shows a country's performance in foreign trade, including its competitiveness and trade balance
- Reveals whether a country is a creditor or debtor nation
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Description
Test your knowledge of international economics with this quiz on balance of payments. Challenge yourself with questions about economic transactions between residents of different countries, receipts and payments for goods and services, and capital received and paid.
