the balance of payments MCQs – Page 2

Practise focused the balance of payments questions with marked answers for exam preparation and subject revision.

the balance of payments Mcqs

21. Which of the following statements is True ?
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A. A country runs a current account surplus if it sells more of its assets abroad than it buys abroad

B. A country runs a capital account deficit if it imports more than it exports

C. The overall sum of all the entries in the balance of payments must be positive

D. If the current account is in surplus the capital account must be in deficit

22. The difference between the balance on current account and the balance on capital account is the ?
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A. balance of payments

B. balance of trade

C. statistical discrepancy

D. trade deficit

23. The current account includes ?
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A. services

B. the value of trade in merchandise

C. unilateral transfers

D. All of the above

24. Credit (-) items in the balance of payments correspond to anything that ?
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A. involves receipts from foreigners

B. increases the domestic money supply

C. involves payments to foreigners

D. decreases the demand for foreign exchange

25. The differences between a countrys merchandise exports and its merchandise imports is the ?
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A. current account

B. balance of payments

C. capital account

D. balance of trade

26. Debit entries on the balance of payments are the entries that would ?
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A. mean a loss of foreign exchange

B. exist at the bottom line after all accounts are totaled

C. indicate a surplus exist

D. bring foreign exchange into the country

27. Current account deficit are offset by______________?
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A. merchandise trade surpluses

B. merchandise trade deficits

C. capital/financial account surpluses

D. capital/financial account deficits

28. Historically countries at early stages of rapid economic development have tender to experience ?
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A. trade deficits and an excess of domestic savings over investment

B. trade surplus and an excess of investment over domestic saving

C. trade deficit and an excess of investment over domestic saving

D. trade surpluses and an excess of domestic saving over investment

29. When all of the debit or credit items in the balance of payments are combined ?
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A. capital imports equal capital exports

B. merchandise imports equal merchandise exports

C. the total surplus or deficit equals zero

D. services exports equal services imports

30. The record of a countrys transactions in goods, services and assets with the rest of the world is its ?
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A. current account

B. capital account

C. balance of payments

D. balance of trade

31. The U.S balance of payments is constructed by ?
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A. the U.S Department of commerce

B. the U.S Department of labor

C. the U.S Department of Agriculture

D. the council of Economic Advisers to the President

32. A nation wishing to reduce its current account deficit would be advised to ?
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A. reduce government taxes

B. engage in more government spending

C. decrease domestic consumption

D. increases private investment spending

33. A countrys transactions with the rest of the world are recorded in the ?
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A. balance of international indebtedness

B. income statements

C. balance of payments

D. balance of financial transactions

34. Credit (+) items in the balance of payments correspond to anything that ?
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A. decreases the demand for foreign exchange

B. involves payments to foreigners

C. increases the domestic money supply

D. involves receipts from foreigners

35. Direct investment and security purchases are classified as ?
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A. merchandise trade transactions

B. current account transactions

C. capital account transactions

D. unilateral transfer transactions

36. All of the following are credit items in the balance of payments except ?
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A. payments for American services to foreigners

B. investment inflows

C. merchandise exports

D. private gives to foreign residents

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