The Balance Of Payments And The National Economy(Economics ) Questions and Answers

Question 1. The differences between a country’s merchandise exports and its merchandise imports is the ?
  1.    balance of payments
  2.    capital account
  3.    current account
  4.    balance of trade
Explanation:-
Answer: Option D. -> balance of trade
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 2. Which of the following statements is correct ?
  1.    If the current accounts is in surplus then the capital account must also be in surplus
  2.    If the current account is in deficit then the capital account must also be in deficit
  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
Explanation:-
Answer: Option D. -> The overall sum of all entries in the balance of payments must be zero
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 3. The balance of trade is a record of ?
  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
Explanation:-
Answer: Option D. -> the value of merchandise exports minus imports
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 4. _______ is needed to balancell the balance of payments statements?
  1.    credit transactions
  2.    debit transactions
  3.    unilateral transfers
  4.    statistical discrepancy
Explanation:-
Answer: Option D. -> statistical discrepancy
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 5. The difference between a country’s balance of payments and its balance of international indebtedness?
  1.    is equal to official reserve transactions
  2.    occurs because of foreign exchange fluctuations
  3.    reflects statistical discrepancies
  4.    reflects the difference between flow and stock concepts
Explanation:-
Answer: Option D. -> reflects the difference between flow and stock concepts
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 6. In the balance of payments travels and tourism are included in the category of ?
  1.    unilateral transfers
  2.    capital account
  3.    merchandise account
  4.    services account
Explanation:-
Answer: Option D. -> services account
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 7. A current account surplus implies that ?
  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
Explanation:-
Answer: Option A. -> the country is a net lender to the rest of the world
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 8. A nation will a current account deficit will be ?
  1.    lending more money to other nations
  2.    experiencing a surplus in exports of goods an services
  3.    reducing its indebtedness to other nations
  4.    going further into debt with other nations
Explanation:-
Answer: Option D. -> going further into debt with other nations
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 9. Historically countries at early stages of rapid economic development have tender to experience ?
  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
Explanation:-
Answer: Option A. -> trade deficit and an excess of investment over domestic saving
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 10. When a country has a trade deficit it ?
  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
Explanation:-
Answer: Option B. -> purchases more goods from the rest of the world than it sells
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
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