Cards (28)

    • What is the Balance of Payments (BOP)?
      Record of economic transactions
    • Primary income in the Current Account includes income received from or paid to foreign countries
    • Match the Capital and Financial Account component with its description:
      Capital Transfers ↔️ Related to fixed assets or debt forgiveness
      Foreign Direct Investment ↔️ Investments in foreign entities for control
      Portfolio Investment ↔️ Purchase of stocks and bonds in foreign markets
      Other Investments ↔️ Loans and other financial assets
    • If a country has a Current Account surplus, it must have a Capital & Financial Account deficit
      True
    • Exports of goods are included in the Current Account
      True
    • The Current Account represents the flow of goods, services, and income
    • What does a Current Account surplus indicate for a country?
      Inflow of funds
    • The Balance of Payments (BOP) is a record of all economic transactions between residents of a country and the rest of the world
    • The Current Account components represent the flow of goods, services, and income between a country and the rest of the world.
      True
    • If a country exports more goods than it imports, it has a Current Account surplus and a Capital & Financial Account deficit.

      True
    • If the US dollar depreciates against the euro, American goods become more affordable for European buyers.
      True
    • The Balance of Payments (BOP) is divided into two main accounts: the Current Account and the Capital & Financial Account
    • Order the components of the Current Account based on their typical contribution to a country's trade balance:
      1️⃣ Goods
      2️⃣ Services
      3️⃣ Primary Income
      4️⃣ Secondary Income
    • Foreign Direct Investment (FDI) involves purchasing stocks in foreign markets
      False
    • The relationship between the Current Account and Capital & Financial Account ensures overall financial stability
    • The Current Account and Capital & Financial Account offset each other to ensure the overall Balance of Payments is balanced
    • A depreciation of the US dollar against the euro can increase US exports and reduce US imports.

      True
    • Match the Current Account component with its description:
      Goods ↔️ Exports and imports of physical merchandise
      Services ↔️ Exports and imports of intangible services
      Primary Income ↔️ Income received from foreign countries
      Secondary Income ↔️ Unilateral transfers
    • What are the two main accounts of the Balance of Payments?
      Current and Capital & Financial
    • The Current Account and Capital & Financial Account offset each other to ensure the Balance of Payments is balanced
    • Match the scenario with its impact on the Balance of Payments:
      Trade surplus ↔️ Deficit in the Capital & Financial Account
      Excess earnings invested abroad ↔️ Maintains overall BOP equilibrium
    • The 'Goods' component of the Current Account includes exports and imports of physical merchandise
    • Order the following impacts of Current Account surpluses and Capital & Financial Account deficits:
      1️⃣ Current Account surplus: Inflow of funds
      2️⃣ Capital & Financial Account deficit: Outflow of funds
      3️⃣ Overall Balance of Payments: Zero
    • Arrange the following impacts of exchange rate changes on exports and imports:
      1️⃣ Currency Depreciation: Exports become cheaper
      2️⃣ Currency Depreciation: Imports become more expensive
      3️⃣ Currency Appreciation: Exports become more expensive
      4️⃣ Currency Appreciation: Imports become cheaper
    • A country with a trade surplus might invest its excess earnings abroad, creating a deficit in the Capital & Financial Account.

      True
    • Match the component of the Capital and Financial Account with its description:
      Capital Transfers ↔️ Forgiveness of debt
      Foreign Direct Investment ↔️ Investment to control foreign entities
      Portfolio Investment ↔️ Purchase of stocks and bonds
      Other Investments ↔️ Loans and financial assets
    • The Balance of Payments (BOP) is influenced by factors such as exchange rates, trade policies, inflation rates, income levels, and government debt
    • Current Account surpluses can boost economic growth, while deficits may slow growth due to increased imports