4.1.7 balance of payments

Question 1

defining of the balance of payments

Answer 1

measures the inflows and outflows of money into and out of a country

Question 2

components of the current account

Answer 2

trade in goods/services (trade balance)

income and transfers e.g. govt. fees (income balance)

Question 3

causes of current account surplus

Answer 3

exports > imports

recession

competitive resources (deflation/disinflation/high quality exports)

high level of natural resources

Question 4

causes of current account deficit

Answer 4

imports > exports

sustained economic growth

uncompetitive imports (inflation/poor quality products)

low level of natural resources

Question 5

components of financial account

Answer 5

FDI

portfolio investment

reserves

Question 6

definition of a capital account

Answer 6

minor payments/transfers