Identify a true statement about balance of payments.
A)Balance of payments includes foreign borrowing and lending.
B)Balance of payments surplus indicates more money flowing out than in.
C)Balance of payments excludes overseas investments.
D)Balance of payments deficit indicates more money flowing in than out.

Question

Quizplus · Accepted Answer

Balance of payments refers to all the economic transactions that occur between a country's residents and those in the rest of the world. This includes not only the flow of goods and services, but also capital movements such as foreign borrowing and lending, as well as investment in overseas markets. Option A accurately identifies this aspect of balance of payments. Option B is incorrect as surplus indicates more money flowing in than out, not the other way around. Option C is also incorrect as overseas investments are included in balance of payments.

Identify a True Statement About Balance of Payments