ECONOMICS
BALANCE OF PAYMENTS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The net financial result of transactions with the overseas sector
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the net borrowing and lending with the overseas sector
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The net effect of foreign trade in the foregin echange market
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the daily balance of foreign currencies in the foreign exchange market
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Detailed explanation-1: -The balance of payments summarises the economic transactions of an economy with the rest of the world. These transactions include exports and imports of goods, services and financial assets, along with transfer payments (like foreign aid).
Detailed explanation-2: -What is the Current Account? One of three components of a country’s balance of payments system, the current account is the country’s trade balance, or the balance of imports and exports of goods and services, plus earnings on foreign investments minus payments to foreign investors.
Detailed explanation-3: -Balance of trade (BoT) is the difference that is obtained from the export and import of goods. Balance of payments (BoP) is the difference between the inflow and outflow of foreign exchange. Type of transactions included. Transactions related to goods are included in BoT.
Detailed explanation-4: -c) Financial Account (BOP item FA) The Financial account covers all transactions associated with changes of ownership in the foreign financial assets and liabilities of an economy.