Balance of Payments

Question 1

What are the balance of payments?

Answer 1

a record of a country’s transactions with the rest of the world

Question 2

What does the balance of payments consist of?

Answer 2

the current and financial records

Question 3

What does the current account measure?

Answer 3

the next exports of goods and services

Question 4

What is a current account surplus?

Answer 4

when the value of export goods and services are greater than the value of imports

Question 5

What is a current account deficit?

Answer 5

when the value of import goods and services are greater than value of exports

Question 6

What is a deterioration in the current account?

Answer 6

when the current account becomes larger or it moves from a surplus to a deficit

Question 7

What are 2 balance of trade in services?

Answer 7

tourism and insurance

Question 8

What are 2 balance of trade in goods?

Answer 8

cars and tractors

Question 9

What are 3 impacts of current account deficit?

Answer 9

expenditure is leaving the country
uncompetitive economy
can indicate strong economic growth were incomes are rising

Question 10

What are 3 ways you can reduce a balance of payments deficit?

Answer 10

devaluation
reduce consumer spending
supply side policies

Question 11

What is devaluation

Answer 11

this involves lowering the value of the currency against other to make exports cheaper and imports more expensive