3.2(4) Favourable BOT

Question 1

Balance of payments

Answer 1

Records a country’s international transactions with the rest of the world over a period of time, usually a year

Question 2

Balance of trade

Answer 2

Records the inflow and outflow of local currency arising from international trade of goods and services

Question 3

Protectionist measures

Answer 3

Economic policies aimed at restricting trade between countries, with the primary intent to protect domestic producers and workers from foreign competition

Question 4

What are the policies to address BOT deficit?

Answer 4

– Contractionary fiscal and interest rate monetary policies
– Protectionist measures
– Devaluation/Depreciation of domestic currency
– Supply-side policies
– Free trade policies

Question 5

What are the policies to address BOT surplus?

Answer 5

– Expansionary fiscal and interest rate monetary policies
– Removal of protectionist measures
– Revaluation/Appreciation of domestic currency