Questions and Answers
What does the balance of payments (BoP) indicate?
Difference between imports and exports of goods and services
What is the current account of the balance of payments (BoP) composed of?
Goods, services, primary income, and secondary income
What is the primary objective of the balance of payments (BoP)?
To measure the economic performance of a country
Study Notes
Balance of Payments (BoP)
- The balance of payments (BoP) indicates the inflows and outflows of a country's goods, services, and financial transactions with the rest of the world.
Composition of Current Account
- The current account of the BoP is composed of:
- Trade in goods (exports and imports)
- Trade in services (such as tourism, transportation, and insurance)
- Income (earnings on investments and compensation of employees)
- Transfers (remittances, foreign aid, and other one-way flows)
Primary Objective of BoP
- The primary objective of the BoP is to reveal the overall surpluses or deficits in a country's international transactions, which can help policymakers assess the country's economic performance and make informed decisions.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
