18 Questions
What is the primary difference between the current account and the capital account in a country's foreign trade analysis?
The current account records visible and invisible transactions, while the capital account records loans, investments, and reserve management.
What is a favorable balance of trade, and how does it affect the current account?
A favorable balance of trade occurs when a country exports more than it imports, resulting in a surplus in the current account.
What is the formula for calculating aggregate saving, and what components make up this aggregate?
Aggregate Saving = National Saving + Private Saving + Government Saving
What are unilateral transfers, and where are they recorded in a country's foreign trade analysis?
Unilateral transfers refer to one-sided transfers of funds between nations, and they are recorded in the current account.
What is the relationship between the current account and capital account, and what is the overall balance?
The overall balance is the sum of the current and capital accounts. If the overall balance is positive, the country has a surplus, and if it is negative, the country has a deficit.
How does an unfavorable balance of trade affect a country's current account?
An unfavorable balance of trade occurs when a country imports more than it exports, resulting in a deficit in the current account.
What is the significance of the current account in a country's balance of payments?
It reflects the country's transactions related to goods and services, income, and unilateral transfers.
What is the role of net factor payment in a country's balance of payments?
It represents the difference between the income earned by a country's residents from abroad and the income paid to foreign residents.
How does the capital account influence a country's balance of payments?
It records transactions related to the acquisition and disposal of assets, such as foreign direct investment and portfolio investment.
What is the primary principle on which the balance of payment is based?
Double-entry bookkeeping
What is the relationship between aggregate saving and investment in a country's economy?
Aggregate saving equals investment in a closed economy, as saving is used to finance investment.
What are unilateral transfers in the context of the balance of payment?
One-sided transfers of funds between nations, such as aid, pension payments, and remittances
What is the significance of the balance of trade in a country's foreign trade analysis?
It reflects the difference between a country's exports and imports of goods and services.
What is the formula to calculate the overall balance of payment?
Current Account + Capital Account + Financial Account = 0
What is the role of foreign trade in a country's economic health?
It influences the country's economic growth, employment, and standard of living, as well as its balance of payments.
What does the current account of the balance of payment represent?
The net flow of goods, services, and income
What is the capital account component of the balance of payment concerned with?
The net flow of financial assets
What is the relationship between the current account and the capital and financial accounts in the balance of payment?
Any deficit in the current account is offset by a surplus in the capital or financial account
This quiz assesses understanding of factors affecting petrol and diesel prices, including demand and supply, with a focus on statistical analysis. It also covers foreign trade concepts, such as the current account and balance of payments.
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