Payments among nations and exchange rates

Question 1

Balance of payments (BOP)

Answer 1

The set of accounts recording all flows of value between a nation’s residents and the residents of the rest of the world during a period of time

Question 2

Balance of payments (BOP)

Answer 2

The set of accounts recording all flows of value between a nation’s residents and the residents of the rest of the world during a period of time

Question 3

A credit item (positive sign)

Answer 3

An item for which the country must be paid.

Creates a monetary claim on a foreigner

Question 4

A debit item (negative sign)

Answer 4

An item for which the country must pay

Creates a monetary claim owed to a foreigner

Question 5

Double entry bookkeeping meaning

Answer 5

If we add all the credits and debits in a country’s balance of payments, it will equal zero

Question 6

Current account (CA)

Answer 6

Trade in goods and services, income transfers

Question 7

Financial account (FA)

Answer 7

Foreign investment

Question 8

Official reserves account (OR)

Answer 8

Central bank transactions

Question 9

Good and services balance (Trade balance)

Answer 9

An important balance within the current account

Question 10

Official international reserves

Answer 10

Money like assets that are held by governments and that are recognised by governments as fully acceptable for payments between them

Question 11

Statistical discrepancy

Answer 11

The net value of all errors and omissions in measuring the items

Question 12

The international investment position

Answer 12

A statement of the stocks of a nation’s international assets and foreign liabilities at a point in time, usually the end of a year