Chapter 5

Question 1

According to _______, “The balance of payments of a country is a systematic record of all economic transactions between the residents of the reporting country and residents of foreign countries during a given period of time”.

Answer 1

Kindle Berger,

Question 2

According to Kindle Berger, “The _________ of a country is a systematic record of all economic transactions between the residents of the reporting country and residents of foreign countries during a given period of time”.

Answer 2

balance of payments

Question 3

statement can be broken down into various components. Those that receive the most attention are the current account and the capital account.

Answer 3

balance-of-payments

Question 4

FEATURES of BOP

Answer 4

Systematic record of all economic transactions between one country and the rest of the world

Includes all transactions, visible as well as invisible

It relates to an annual statement

Adopts a double-entry bookkeeping system

Question 5

BALANCE OF TRADE.

Answer 5

Is the largest components of a country’s balance of trade.

Difference between the value of a country’s exports and the value of a country’s imports for a given period.

Also referred to as the trade balance, the international trade balance, commercial balance, or the net exports.

Question 6

Statement of actual receipts and payments in short period.

Answer 6

Current account

Question 7

It includes the value of export and imports of both visible and invisible goods.

Answer 7

Current account

Question 8

There are four major components of the current accounts namely – visible and invisible trade, unilateral transfers to and from abroad, and income receipts and payments.

Answer 8

Current account

Question 9

Current account components

Answer 9

Visible trade
Invisible trade
Unilateral transfer to and from abroad
Income receipts and payments

Question 10

Is the net of exports and imports of goods

Answer 10

Visible trade

Question 11

Is the net of export and imports of services

Answer 11

Invisible trade

Question 12

Refers to payment that are not factor payments

Answer 12

Unilateral transfers to and from abroad

Question 13

records all international transactions that involve a resident of the country concerned changing either his assets with or his liabilities to a resident of another country.

Answer 13

Capital account

Question 14

differs between the receipts and payments on account of capital account.

Answer 14

Capital account

Question 15

involves inflows and outflows relating to investments, short term borrowings/lending, and medium term to long term borrowing.

Answer 15

Capital account

Question 16

Three major components of a capital account

Answer 16

Loans to and borrowings from abroad

Investments to/from abroad

Changes in foreign exchange reserves

Question 17

THE RESERVE ACCOUNT

Answer 17

International monetary fund

Special drawing rights

Preserve and monetary gold

Question 18

works to achieve sustainable growth and prosperity for all of its 190 member countries.

Answer 18

International monetary fund

Question 19

international reserve asset created by the IMF to supplement the official reserves of its member countries.

Answer 19

Special drawing rights

Question 20

gold reserve, a fund of gold bullion or coin held by a government or bank, as distinguished from a private hoard of gold held by an individual or nonfinancial institution.

Answer 20

Reserve and monetary gold