Balance of Payments Quiz

What does the Balance of payments accounts record?

• Transactions in goods, services and assets between residents of a country with the rest of the world during a fiscal year.

• Transactions in foreign exchange assets and liabilities during fiscal year.

• Inflows and outflows of foreign exchange during a fiscal year.

• None of these.

Which of the following is true for transfer payments in the current account of balance of payments?

• Transfer payments are the receipts which the residents of the country get for free, without having to provide any goods and services in return.

• They consist of gifts, remittances and grants.

• They could be given by the government or by private citizen living abroad.

• All of these.

Which of the following is not a component of the current account of balance of payments?

• Exports and imports of goods and services

• Remittances given by private citizens living abroad

• Net international income from compensation of employees

• None of the above

"unilateral Transfers" are also known as:

• Bilateral transfers

• One-way transfers

• Both (a) and (b)

• Neither (a) nor (b)

When receipts of foreign exchange are more than payments of foreign exchange, BOP is:

• Balanced

• Surplus

• Deficit

• None of the above

Autonomous transactions take place on:

• Current account only

• Capital account only

• Both (a) and (b)

• Neither (a) nor (b)

An Indian company located in India invests in a company located abroad. This transaction is entered in India's balance of payments accounts on:

• credit side of current account

• debit side of current account

• credit side of capital account

• debit side of capital account

_______ is the difference between the value of exports and value of imports of services, transfers and flows of income of a country in a given period of time.

• balance of trade

• net invisibles

• trade surplus

• current accounts surplus

Interest on loan received from Nepal is recorded on the _______ side of the _______ account of the Balance of payments.

• debit side, current account

• debit side, capital account

• credit side, current account

• credit side, capital account

Read the following statements carefully:

Statement 1: Exports of financial services by India recorded on the credit side of current account.

Statement 2: Foreign Direct Investment is India will be recorded on credit side of capital account.

• statement 1 is true and statement 2 is false.

• statement 1 is false and statement 2 is true.

• both statements 1 and 2 are true.

• both statements 1 and 2 are false.