WorksheetsBalance of Payments
Total questions: 15
Worksheet time: 15mins
Profits from a UK football club, paid back to a wealthy foreign owner, would count as:
A credit as foreign direct investment on the capital/financial account
An outflow investment incomes on the current account
Import expenditure on the balance of trade of services
Current transfers
What is the balance of payments?
The value of imported and exported goods
Accounts showing the record of all imports and exports
A record of an economys international financial transactions
(X-M)
The balance of payments includes...
Current account and capital account
Current account, capital account and trade account
Trade account, credit account and capital account
Current account, financial account and capital account
The UK Current Account has, for the majority of the last 17 years...
Been in surplus
Been in deficit
Stayed the same
Balance with the capital account
Why does the balance of payments "balance"?
Exports equals imports
The current account equals the financial account
The capital account equals imports and exports
The current account equals the financial and capital account
The financial account records...
Flows of money relating to financial assets
Flows of money relating to borrowing
Flows of money relating to foreign currency exchange
Flows of money relating to speculation
The capital account...
Records sales and purchases of capital goods
Records transfers, sale/purchases of all capital assets
Records sale/purchases of businesses
Records all transactions of tangible capital assets
Running a current account surplus could cause...
A fall in aggregate demand
The economy to borrow and sell assets
Unemployment to rise
The exchange rate to appreciate
All of the following could help solve a current account deficit, EXCEPT...
Lowering interest rates
Putting tariffs on imported goods
Depreciating the exchange rate
Improving the competitiveness of exports
All of the following are reasons to manage the current account EXCEPT...
The current account is a component of AD
The current account will impact on interest rates
A surplus can be a source of economic growth
Export incomes have a multiplying effect on GDP
What is the Balance of Payments (BoP)?
A record of a country's total debts.
A record of all the economic transactions between a country and the rest of the world during a given time period.
A financial statement of a country's exports only.
A list of a country's economic sanctions.
How is an outflow of money from the country recorded in the BoP?
As a positive amount.
As a neutral transaction.
It is not recorded in the BoP.
As a negative amount.
Which of the following is a component of the current account in the Balance of Payments?
A) Foreign direct investment
B) Portfolio investment
C) Trade in goods and services
D) Official reserves
What does a surplus in the Balance of Payments indicate about a country's economy?
A) The country is importing more than it exports
B) The country is exporting more than it imports
C) The country has a high level of foreign debt
D) The country is experiencing economic recession
Which account in the Balance of Payments records the purchase and sale of financial assets?
A) Current account
B) Capital account
C) Financial account
D) Official reserves account
