Cards (33)

    • The current account measures trade in goods, services, and income.

      True
    • Match the current account component with its description:
      Trade in Goods ↔️ Value of exported and imported goods
      Trade in Services ↔️ Value of services exchanged internationally
      Income ↔️ Earnings on investments abroad
      Net Transfers ↔️ Financial transfers like foreign aid
    • The capital account and financial account are part of the balance of payments
    • Match the account with its key focus:
      Capital Account ↔️ Transfer of capital and assets
      Financial Account ↔️ Change in ownership of assets
    • What does the current account track in a country's balance of payments?
      Trade, income, net transfers
    • What does the "Trade in Goods" component measure in the current account?
      Exported and imported goods
    • What is included in the "Net Transfers" component of the current account?
      Foreign aid and gifts
    • What does the financial account measure in the balance of payments?
      Change in ownership of assets
    • What are the key differences between the capital and financial accounts?
      Asset transfer vs ownership change
    • Higher domestic inflation can worsen the trade balance.

      True
    • Why is the balance of payments crucial for the global economy?
      Tracks trade and investment
    • International cooperation and trade agreements can stabilize global balances by reducing trade barriers.

      True
    • What is the balance of payments?
      Record of economic transactions
    • What does the capital account measure?
      Flow of capital
    • Steps to understand the balance of payments
      1️⃣ Identify the current account
      2️⃣ Identify the capital account
      3️⃣ Analyze trade balance
      4️⃣ Assess investment income
      5️⃣ Track financial asset flows
    • The capital account focuses on the change in ownership of assets.
      False
    • Why is the balance of payments important for a global economy?
      Tracks economic interactions
    • The current account is part of the **balance of payments
    • The capital and financial accounts are other main components of the balance of payments
    • The capital account focuses on asset ownership changes, while the financial account focuses on asset transfers.
      False
    • The capital account includes foreign direct investment, while the financial account includes loans
    • How do higher domestic interest rates affect capital flows?
      Attract foreign capital
    • What fiscal policy can a country use to reduce a current account deficit?
      Reduce government spending
    • The balance of payments consists of two main accounts: the current account and the capital account
    • How many key components does the current account have?
      Four
    • The current account includes trade in goods, services, income, and net transfers
    • The "Income" component includes earnings on investments abroad.

      True
    • Government policies such as tariffs can directly impact trade and investment flows in the balance of payments
    • The current account measures the trade in goods, services, income, and net transfers
    • What does the financial account include?
      Loans and securities
    • Match the account with its key components:
      Capital Account ↔️ Foreign direct investment
      Financial Account ↔️ Loans and securities
    • How does a weaker domestic currency affect the balance of payments?
      Exports become cheaper
    • To manage a current account surplus, a country can stimulate imports