ECONOMICS
BALANCE OF PAYMENTS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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current account
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financial account
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official reserves
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None of the above
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Detailed explanation-1: -Capital account – The record of a country’s international transactions involving purchases or sales of financial and real assets (borrowing, lending, and investments).
Detailed explanation-2: -Statement 3 is correct: The Balance of Payments (BoP) includes both the current account and capital account, in the capital account there is the nation’s imports and exports of capital and foreign aid.
Detailed explanation-3: -There are three components to the current account – the ‘trade balance’, ‘primary income balance’ and ‘secondary income balance’. In economic analysis or commentary, most attention is usually given to the trade balance, which records the difference between the value of our exports and imports of goods and services.
Detailed explanation-4: -The answer is c). The two accounts in the balance of payment system are the current account and capital account.