Balance of Payment {BOP} Exam | Questions & Answers (100 %Score) Latest Updated 2024/2025 Comprehensive Questions A+ Graded Answers | With Expert Solutions

Balance of Payment {BOP} Exam | Questions & Answers (100 %Score) Latest Updated
2024/2025 Comprehensive Questions A+ Graded Answers | With Expert Solutions


Balance of payments - a record of the transactions that a country has with the rest of the world



components of BOP accounts - 1) the current account

-balance of trade:

1. trade in goods-the trade(exports and imports) in visible goods

2. trade in services- the trade in invisble goods



3. income flows-net investment income e.g. profits, interest payments, dividends on shares



4. current transfers: the net transfers of money by governent and individuals e.g. grants for overseas,
migrantworkers' remittances sent back to their own countries



2)the capital account: records capital movements in terms of assets(including physical assets such as
purchase of land) and liabilities(debt forgiveness) into and out of a country



3)the financial account: records capital inflows into a country and the capital outflows out of a country,
resulting from investments(such as building of factories)

*also includes loans and changes in reserves



net errors and omissions - transactions that go unrecorded caused by time delay in reporting the
transactions



balancing items - a positive or negative figure that accounts for any statistical errros in the balance of
payments and ensures that the accounts, when added together, come to zero



BOP deficit - money outflow is greater than money inflow (expenditure exceeds income)



BOP surplus - money inflow is greater than money outflow(income exceeds expenditure)