2.1.4 balance of payments

Question 1

balance of payments (BoP) (def.)

Answer 1

a record of all the financial transactions that occur between it and the rest of the workd

Question 2

what are the two sections of the BoP?

Answer 2

the current account

the financial and capital account

Question 3

current account (def.)

Answer 3

all transactions related to goods/services along with payments related to the transfer of income

Question 4

financial and capital account (def.)

Answer 4

all transactions related to savings, investment and currency stabilisation

Question 5

current account deficit (def.)

Answer 5

when the value of the outflows is greater than the value of inflows

imports > exports

Question 6

current account surplus (def.)

Answer 6

when the value of the inflows is greater than the value of the outflows

imports < exports