A level Balance of Payments Quiz 1

15 Questions

Quiz Description

In this quiz, we shall be going through the study of the balance of payments. In this topic, we have concepts like a debt trap, balance in a capital account, merchandise, and many more that are being mentioned here, and they are being explained in the form of questions. You won’t want to miss out on this.

Often abbreviated as BOP, the balance of payment refers to a statement that records all the monetary transactions made between inhabitants of a country and the rest of the world throughout any given period. The BOP includes both current and capital accounts where the current account comprises a country’s net trade in goods and services, its net earnings on extraterritorial investments, and net transfer payments. On the other hand, the capital account has to deal with a country's transactions in financial instruments and central bank reserves.

There is a lot more to learn on BOP. If you are determined to know more, just take this economic quiz and train yourself. Happy answering. 

1:

 Which of the following does not form part of current account under balance of payments? 


Correct
  • 1:
    Export and import of goods
  • 2:
    Export and import of services
  • 3:
    Income receipts and payments
  • 4:
    Capital receipts and payments
2:

 Which of the following pairs is not correctly matched with regard to balance of payment accounts? 


Correct
  • 1:
    Import of goods and services – Debit in the current account
  • 2:
    Receipts of transfer payments – Credit in the current account
  • 3:
    Direct investment receipt – Credit in the capital account
  • 4:
    Portfolio investment payments – Debit in the current account
3:

  A country is said to be in debt trap if 


Correct
  • 1:
    It has to abide by the conditionality imposed by the International Monetary Fund
  • 2:
    It is required to borrow money to make interest payments on outstanding loans
  • 3:
    It has been refused loans or aid by creditors
  • 4:
    The World Bank charges a very high rate of interest on outstanding as well as new loans
4:

 Balance in capital account refer to the 


Correct
  • 1:
    Nation’s net exports of goods and services
  • 2:
    Nation’s net exports of financial claims
  • 3:
    Nation’s net exports of international official reserve assets
  • 4:
    Nation’s sum of net exports of goods, services and financial claims
5:

 Which of the following are the components of balance of payments?

  1. Financial capital transfer
  2. External loan and investment
  3. Foreign institutional investment
  4. Issuing of external bonds
  5. Export and imports of goods and services

Select the correct answer  using the codes given below:


Correct
  • 1:
    1, 2, and 3 only
  • 2:
    2, 3, and 4 only
  • 3:
    1, 4, and 5 only
  • 4:
    1, 2, 3, 4, and 5
6:

 Which of the following statements is correct ? 


Correct
  • 1:
    If the current accounts is in surplus then the capital account must also be in surplus
  • 2:
    If the current accounts is in surplus then the capital account must also be in surplus
  • 3:
    The overall sum of all the entries in the balance of payments must be positive
  • 4:
    The overall sum of all entries in the balance of payments must be zero
7:

 The differences between a country’s merchandise exports and its merchandise imports is the ? 


Correct
  • 1:
    balance of trade
  • 2:
    capital account
  • 3:
    current account
  • 4:
    balance of payments
8:

 _______ is needed to balancell the balance of payments statements? 


Correct
  • 1:
    credit transactions
  • 2:
    debit transactions
  • 3:
    statistical discrepancy
  • 4:
    unilateral transfers
9:

 The balance of trade is a record of ? 


Correct
  • 1:
    exports and imports of financial assets
  • 2:
    the current account plus capital account
  • 3:
    the net export of goods and services
  • 4:
    the value of merchandise exports minus imports
10:

 Historically countries at early stages of rapid economic development have tender to experience ? 


Correct
  • 1:
    trade deficit and an excess of investment over domestic saving
  • 2:
    trade surplus and an excess of investment over domestic saving
  • 3:
    trade deficits and an excess of domestic savings over investment
  • 4:
    trade surpluses and an excess of domestic saving over investment
11:

 When a country has a trade deficit it ? 


Correct
  • 1:
    purchases more stocks and bonds from the rest of the world than it sells
  • 2:
    purchases more goods from the rest of the world than it sells
  • 3:
    sells more goods to the rest of the world than it purchases
  • 4:
    sells more stocks and bonds to the rest of the world than it purchases
12:

 A current account surplus implies that ? 


Correct
  • 1:
    the country is a net lender to the rest of the world
  • 2:
    the country is running a net capital account surplus
  • 3:
    foreign investment in domestic securities is at very low levels
  • 4:
    All of the above
13:

 A nation will a current account deficit will be ? 


Correct
  • 1:
    lending more money to other nations
  • 2:
    experiencing a surplus in exports of goods an services
  • 3:
    reducing its indebtedness to other nation
  • 4:
    going further into debt with other nations
14:

 The difference between a country’s balance of payments and its balance of international indebtedness? 


Correct
  • 1:
    is equal to official reserve transactions
  • 2:
    occurs because of foreign exchange fluctuations
  • 3:
    reflects the difference between flow and stock concepts
  • 4:
    reflects statistical discrepancies
15:

 In the balance of payments travels and tourism are included in the category of ? 


Correct
  • 1:
    unilateral transfers
  • 2:
    services account
  • 3:
    merchandise account
  • 4:
    capital account

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A level Balance of Payments Quiz 1
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