ECONOMICS
BALANCE OF PAYMENTS
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
flow
|
|
|
stock
|
|
|
both a and b
|
|
|
none of above
|
Detailed explanation-1: -Current transfers are unilateral transfers with nothing received in return. These include workers’ remittances, donations, aids and grants, official assistance, and pensions. Due to their nature, current transfers are not considered real resources that affect economic production.
Detailed explanation-2: -The current account records imports and exports, as well as transfer payments.
Detailed explanation-3: -In calculating current account, exports are marked as credit (the inflow of money) and imports as debit (the outflow of money).
Detailed explanation-4: -What Is the Current Account? The current account records a nation’s transactions with the rest of the world-specifically its net trade in goods and services, its net earnings on cross-border investments, and its net transfer payments-over a defined period, such as a year or a quarter.
Detailed explanation-5: -The main components of the current account are: Trade in goods (visible balance) Trade in services (invisible balance), e.g. insurance and services. Investment incomes, e.g. dividends, interest and migrants remittances from abroad.