24

Question 1

The balance of payments (BOP)

Answer 1

Records all financial transactions made between consumers, businesses and the government in a country with another

Question 2

Current Account

Answer 2

Measures inflow and outflow of goods, services, investment incomes & transfer payments

Question 3

Current Account makeup

Answer 3

• Trade balance in goods
• Trade balance in services
• Net primary income
• Net secondary income

Question 4

Capital Account

Answer 4

Measures all transactions between entities in one country with the rest of the world

Question 5

Capital account makeup

Answer 5

• Capital transfers of fixed assets
• Transfer of transferable contracts
• Debt forgiveness

Question 6

Financial Account

Answer 6

Measures transactions that result in change of ownership of financial assets and liabilities

Question 7

Financial Account makeup

Question 8

Causes Of Current Account Deficit

Answer 8

-> Non-price competitiveness
-> Strong exchange rate
-> Recession in trade partner
-> Volatile global prices

Question 9

Current account deficit

Answer 9

debt > credits

Question 10

Current account surplus

Answer 10

credits > debts

Question 11

Primary income

Answer 11

income from loaning FOP abroad

Question 12

Secondary income

Answer 12

income transfers between countries which occur with no corresponding output