Balance of Payments Review

Which of the following is NOT part of the Balance of Payments?

• current account

• capital account

• financial account

• bank account

Which is not included in the current account?

• trade in goods

• transfer of ownership in fixed assets

• trade in services

• income

When a nation IMPORTS MORE than they EXPORT, the result will be a ?

• trade deficit

• trade surplus

• trade war

• trade mark

Money LEAVING your country is a _______________in the balance of payments

• credit

• debit

Money entering your country is a ________________in the balance of payments.

• credit

• debit

Which is not a result if balance of payments is in disequilibrium?

• unemployment

• decrease in value of currency

• higher interest rates

• too little foreign investment

Which of the following is not a method used to correct disequilibrium in the balance of payments

• quotas

• tariffs

• devalue currency

• go to war

Which is not a cause of balance of payments disequilibrium?

• economy has a high propensity to import goods.

• lack of confidence in economy resulting in few capital inflows

• increases in consumer spending power, too much spent on imports

• unemployment

Government giving a producer money to encourage more overseas sales?

• exchange control

• export subsidies

• tariffs

• quota

How do tariffs help to correct for balance of payments disequilibrium?

• restricts number of imports domestics consumers can purchase.

• stops domestic consumers from having the currency they need to purchase imports

• makes the price of imported goods rise, domestic goods cheaper, less imports purchased

• provides incentives for domestic companies to sell more products in foreign markets (i.e. MORE EXPORTS)