ECONOMICS
BALANCE OF PAYMENTS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Only the movement of financial assets is included in the balance of payments
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Only imports and exports are included in the balance of payments
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The sum of all credit entries is greater than the sum of all debit entries
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A surplus in the financial account means there is a deficit in the current account
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The sum of all debit entries is greater than the sum of all credit entries
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Detailed explanation-1: -Answer and Explanation: The answer is c). The two accounts in the balance of payment system are the current account and capital account.
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: -A current account is a balance of payments account that documents the flow of funds as a result of imports and exports of goods and services of a country. This account either has a positive balance (surplus) or a negative balance (deficit).
Detailed explanation-4: -When the foreign exchange is being sold by the reserve bank when there is a deficit, it is known as official reserve sale. The decrease or increase in official reserves is known as the overall balance of payments deficit or surplus.