ECONOMICS
BALANCE OF PAYMENTS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The Malaysian subsidiary of a British firm pays profits (dividends) back to its parent firm in London.
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An international student purchases food in UKM
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A Malaysian investor purchases a Japan corporate bond through an investment broker in Tokyo.
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All of the above are considered BOP transactions.
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Detailed explanation-1: -GNP does not include dividends and interest from abroad in Income.
Detailed explanation-2: -Which of the following should not be included in the balance of payments account? a)Import of automobile partsb)Interest payment on the loan to the IMFc)Dividend payment to home-country investors from a foreign investord)Bonus shares to equity shareholdersCorrect answer is option ‘D’.
Detailed explanation-3: -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-4: -Balance of payments, UK: July to September 2022 A measure of cross-border transactions between the UK and rest of the world. Includes trade, income, capital transfers and foreign assets and liabilities.