ECONOMICS
TRADE EXCHANGE AND INTERDEPENDENCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Goods in, money in, positive in Current Account
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Goods in, money out, negative in Current Account
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Goods in, money in, positive in Financial Account
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Goods in, money out, negative in Financial Account
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Detailed explanation-1: -For each day your account remains overdrawn, interest charges may also apply (check the latest interest rates for your account). If you see your account is in negative, make sure to bring your account back to positive as soon as you can to avoid or reduce any overdraw fees and interest charges.
Detailed explanation-2: -Why are imports entered as negative items in the balance of payments account? Answer: Imports lead to an outflow of foreign exchange in the country. Thus, they are recorded as negative (debit) items.
Detailed explanation-3: -The current account represents a country’s imports and exports of goods and services, payments made to foreign investors, and transfers such as foreign aid.
Detailed explanation-4: -When a country’s current account balance is negative (also known as running a deficit), the country is a net borrower from the rest of the world. The ratio of the current account balance to the Gross Domestic Product (or % of GDP) provides an indication of the country’s level of international competitiveness.