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Questions and Answers
What does the balance of payments (BoP) indicate?
What does the balance of payments (BoP) indicate?
- Difference between imports and exports of goods and services (correct)
- Net worth of a country's economy
- Total amount of money in circulation within a country
- Total government revenue minus total government expenditure
What is the current account of the balance of payments (BoP) composed of?
What is the current account of the balance of payments (BoP) composed of?
- Fixed and variable costs
- Public and private savings
- Capital flows and financial investments
- Goods, services, primary income, and secondary income (correct)
What is the primary objective of the balance of payments (BoP)?
What is the primary objective of the balance of payments (BoP)?
- To regulate the exchange rate
- To measure the economic performance of a country (correct)
- To control inflation
- To manage government expenditure
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.
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Description
Test your knowledge on balance of payments and foreign exchange with this quiz designed for Class 12 Economics students. Assess your understanding of key concepts and principles related to international trade and finance.
