ECONOMICS (CBSE/UGC NET)

ECONOMICS

BALANCE OF TRADE

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Audi pays $1 million to a U.S. shipper for transporting cars from Germany to the United States.
A
Current account
B
Capital/Financial account
C
Either A or B
D
None of the above
Explanation: 

Detailed explanation-1: -Balance of trade (BOT) is the difference between the value of a country’s exports and the value of a country’s imports for a given period.

Detailed explanation-2: -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. Transactions related to goods are included in BoT. Transactions related to transfers, goods, and services are included in BoP.

Detailed explanation-3: -Overview. The current account is an important indicator of an economy’s speed. It is defined as the sum of the balance of trade (goods and services exports minus imports), net income from abroad, and net current transfers.

Detailed explanation-4: -There are three components of the balance of payment viz current account, capital account, and financial account.

There is 1 question to complete.