IBT

Question 1

How do exports and imports affect the current account?

Answer 1

Exports add value to the current account, while imports subtract value from it.

Question 2

What is the difference between Goods and Services

Answer 2

Goods are those things that have a physical form, while Services are actions for which people or organizations are paid.

Question 3

Why should we care about capital accounts?

Answer 3

We should care about the capital account because it fills in the second half of the balance of payments, providing the full picture of a nation’s international transactions

Question 4

It is a summary of the investments that occur between nations. It includes foreign direct investments, purchase and sales of stocks and bonds, and land ownership.

Answer 4

Capital Accounts

Question 5

What does it mean if a transaction affects the transfer payments account influenced the capital account?

Answer 5

If a transaction that affects the transfer payments account influenced the capital account, then the nation either gave or received capital ownership or some form of investment ownership without doing anything to earn that ownership.

Question 6

What is the common goal of countries with trade surplus or trade deficit?

Answer 6

Earn a return on investment because countries with trade deficit uses the capital of other nations and imports it for its own economy while countries with Trade surpluses attempts to use their extra money to invest in another nation’s economy using their nation’s capital.

Question 7

What is the difference between a trade surplus and a trade deficit?

Answer 7

A trade surplus occurs when a nation exports more goods than it imports while a trade deficit occurs when a nation imports more goods than it exports.

Question 8

What are the primary factors of production mentioned in Factor Price Equalization?

Answer 8

The primary factors of production mentioned are land, water, fertilizer, seeds, labor, and other inputs required for growing rice