The balance of payments is:
A) the accounting of trade in financial assets.
B) the accounting of trade in goods and capital.
C) positive when a country has a trade deficit.
D) negative when a country has a trade surplus.

Question

Quizplus · Accepted Answer

The balance of payments (BOP) is the accounting of all transactions between a country and the rest of the world over a given period. This includes trade in goods and services, as well as financial transactions such as investments and loans. The BOP is divided into two accounts: the current account, which records trade in goods and services, and the capital account, which records trade in financial assets. Therefore, option A is incorrect. The BOP is considered positive when a country has a trade surplus (exports exceed imports) and negative when a country has a trade deficit (imports exceed exports). Therefore, option C and D are incorrect.

The Balance of Payments Is