Statement I.The entire flow of U.S.dollars and foreign currencies into and out of the country constitutes the balance of payments.
Statement II.The balance of payments is part of the balance of trade.

Question

Quizplus · Accepted Answer

Statement I is true as the balance of payments consists of all transactions between a country and foreign countries, including the flow of U.S. dollars and foreign currencies. However, statement II is false as the balance of payments encompasses not only the balance of trade (which includes only visible exports and imports) but also invisible exports and imports, such as services, investments, and foreign aid.