Balance of payment 2024

Question 1

Balance of payments

Answer 1

a summary of the payments and receipts of transactions between a country and the rest of the world for a given period, usually one year.

records ALL the transactions

Question 2

the current account records? (4)

Answer 2

trade in goods
trade in services
transfer to and from private individual s and government
flows of income from investments

Question 3

balance of trade

Answer 3

the balance of goods and services account combined.

Question 4

Capital account records (2)

Answer 4

investment by the residents of the country in other countries

Investment made in the country by FOREIGNERS

Question 5

net errors and omissions

Answer 5

they are discrepancies

Question 6

Official reserves

Answer 6

the government store of foreign currency held by the central bank of a country.

Question 7

Official reserves account

Answer 7

shows the effect of the flows of payments over the year on the official reserves of the country.

Question 8

if the official reserve value is NEGATIVE then

If the official reserve value if POSITIVE then

Answer 8

it is a surplus on the balance of payments account

it is a deficit on the balance of payments account

Question 9

The impact of a deficit (3)

Answer 9

unemployment might increase
falling foreign exchange reserve
exchange rate depreciation

Question 10

measures to reduce a deficit (3)

Answer 10

reduction of aggregate demand through deflationary monetary and fiscal policy.

Import controls

devaluation

Question 11

The impact of a surplus (4)

Answer 11

falling unemployment

increase in reserves

exchange rate appreciation

inflationary pressures

Question 12

Measures to reduce a balance of payments surplus (3)

Answer 12

Increasing aggregate demand through reflationary monetary and fiscal policy

reduction of import control

revaluation of the currency