Balance of Payments Quiz

Which best defines the balance of payments?

• Record of government spend and tax revenue.

• Record of the flows of money with the rest of the world.

• Record of imports and exports.

• Record of net trade, profits, income and transfer payments.

Which of these best describes the trade balance of the UK?

• There is an overall surplus on the trade balance.

• Trade in services is a surplus, trade in goods is a deficit and a surplus overall.

• There is an overall deficit on the trade balance, with a deficit in services and goods.

• There is a deficit in goods which is larger than the surplus from services.

Bank of England purchases US Dollars, how would this appear on the UK balance of payments?

• Outflow on the financial account.

• Outflow on the capital account

• Inflow on the financial account.

• Inflow on the current account.

If an immigrant from China (who is a famous author) moves to the UK and receives royalties payments from their country of origin, how would this appear on the UK balance of payments?

• Inflow on the financial account.

• Outflow on the capital account.

• Inflow on the capital account.

• Outflow on the current account.

If a UK tourist visits Paris and pays to stay in hotel, how would this appear on the French balance of payments?

• Outflow on the current account.

• Inflow on the financial account.

• Inflow on the current account.

• Outflow on the capital account.

Huawei decides to purchase a 30% equity stake in British firm T-Mobile and then Huawei contributes £5bn towards to purchasing of new telecommunications infrastructure in the UK. How would this appear on the UK balance of payments?

• Inflow on the financial account and inflow on the capital account.

• Inflow on the current account and outflow on the capital account.

• Outflow on all three accounts on the balance of payments.

• Inflow on all three accounts on the balance of payments.

Given that the Chinese firm Huawei now owns 30% of T-Mobile… if T-Mobile makes a profit of £30bn. What is the most likely impact upon the UK balance of payments?

• Inflow on the profits and income section on the current account.

• Outflow on the profits and income section of the current account.

• Inflow on the financial account.

• Outflow on the trade balance of the current account.

The United Kingdom government provides the Canadian government with £50M to cover the security costs of Prince Harry and Meghan Markle. How would this be recorded on the UK balance of payments?

• Outflow on the financial account.

• Outflow on the current account

• Inflow on the current account.

• Outflow on the capital account.

Under which one of these circumstances would a current account deficit be considered a negative?

• The budget deficit is equivalent to 10% of GDP.

• Raw materials are imported, processed to add value and then exported later.

• Imports consist mostly of consumer goods.

• The current account deficit is equivalent to 3% of GDP.

Which two of these is likely to lead to a UK current account surplus?

• Inflation in the UK is 4% and average global inflation is 2%

• PED of imports is 0.8 and PED of exports is 0.1… and the value of the pound falls

• The MPM of the general UK population drastically falls

• A large amount of outward FDI

• Short run effect of implementing high tariffs