Question 1

Which of the following items is not included in the invisible items of balance of payments?
A)Shipping
B)Insurance
C)Export and import of goods
D)None of the above

Accepted Answer

Export and import of goods are considered visible items in the balance of payments because they involve physical goods that can be seen and counted. Invisible items typically include services such as shipping and insurance.

Question 2

In balance of payments account, all goods exported and imported are recorded in
A)Capital accounts
B)Merchandise account
C)Current account
D)Savings account

Accepted Answer

Goods exported and imported are recorded in the Current Account of the balance of payments, which tracks the trade balance as well as earnings on foreign investments minus payments made to foreign investors.

Question 3

If a country has fundamental deficit in in the balance of payments, it should resort to
A)Exchange control
B)Devaluation of its currency
C)Inflation
D)Loans

Accepted Answer

Devaluation of its currency can make exports cheaper and imports more expensive, potentially improving the balance of payments by increasing export revenues and reducing import expenditures.

Question 4

Capital account includes
A)Invisible export
B)Long-term capital transaction
C)Invisible import
D)All of the above

Accepted Answer

Capital account includes all long-term capital transactions and invisible exports and imports.

Question 5

Balance of trade includes
A)Visible items
B)Invisible items
C)Both visible and invisible items
D)None of the above

Accepted Answer

The answer of Balance of trade includes
A)Visible items
B)Invisible items
C)Both visible...

Quiz 5: Understanding Tariffs and Quotas in International Trade

Which of the following items is not included in the invisible items of balance of payments?

In balance of payments account, all goods exported and imported are recorded in

If a country has fundamental deficit in in the balance of payments, it should resort to

Capital account includes

Balance of trade includes