ECONOMICS
BALANCE OF PAYMENTS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -Which of the following statements best defines a country’s balance of payments (BoPs)? It is a country’s international transaction statement, which includes merchandise trade, service trade, and capital movement.
Detailed explanation-2: -The balance of payments (BOP) accounting system records international transactions and supplies vital information about the health of a national economy and can detect signs that may lead to which of the following?
Detailed explanation-3: -Balance of payments is the statement of a country’s trade with other nations. The relationship between balance of payments and exchange rates under a floating-rate exchange system will be driven by the supply and demand for the country’s currency and all transactions taking place with other countries.
Detailed explanation-4: -The balance of payments identity holds that the combined balance on the current and capital accounts should be equal in size, but opposite in sign, to the change in the official reserves: BCA + BKA =-BRA. Under the pure flexible exchange rate regime, central banks do not engage in official reserve transactions.