Balance of Payments Worksheet

1. A. Transactions in goods, services and assets between residents of a

country with the rest of the world during a fiscal year

2. Current account

3. B. They consist if gifts remittances and grants

4. False, domestic demand for goods means there is a demand of goods in

domestic market. Whereas, demand for domestic goods means there is
a demand for domestic goods in the domestic market

5. D. None of the above

6. A. The value of exports of goods and services is less than value of

imports of goods and services

7. A. The value of exports of goods is more than the value of imports of

goods

8. Trade balance

9. Export is entered as credit and import is entered as debit

10. Current account deficit if a country imports more than what it exports.
Whereas, current account surplus will arise if the country exports more
goods than what it imports.
11. D. Current account surplus

12. Capital account

13. C. Machinery

14. Capital account, debit

15. Credit, capital account

16. D. None of the above

17. C. Both (a) and (b)

18. Surplus when capital inflows are more than outflows. Deficit when
capital outflows are more than capital inflows.

19. Credit, Capital account

20. B. Gifts, Remittances and Grants

21. D. All of these

22. Errors and omissions

23. False, increase in foreign income improves capital balance

24. Current account

25. B. Trade balance of A will show a surplus whereas trade balance of B will
show a deficit

26. Credit side, current account

27. Debit side, current account

28. C. Credit side of capital account

29. D. Debit side of capital account

30. B. Portfolio investments

31. D. Foreign direct investments

32. True, as exports minus imports is trade balance

33. False, as external assistance is recorded in capital account of Bop

34. False, as export and import of machines is recorded in visible trade of

current account

35. True, as either liability or assets are increased or decreased

36. False, repayment of loans will be recorded on the debit side of current
account as liability is reduced

37. False, as it neither affects assets or liabilities

38. True, as it is a good

39. C. Export and import of invisible items

40. A. Invisibles

41. D. Non-factor income

42. False, it is a part of capital account of Bop as it causes an increase or

decrease in assets or liabilities

43. True, as assets are affected