The balance of payments of a country is a systematic record of
A) all import and export transactions of a country during a given period of time, normally a year
B) goods exported from a country during a year
C) economic transaction between the governments of one country to another
D) capital movements from one country to another
Key terms related to the balance of payments and international transactions.
- Balance of Payments (BOP): A record of all funds going in and out of a country, which tracks international transactions and helps assess a country’s economic health in the global context.
- Current Account (CA): A component of the balance of payments that records international transactions that do not create liabilities. It includes trade in goods and services, income earned or paid on investments, and unilateral transfers.
- Capital and Financial Account (CFA): Another component of the balance of payments that records international transactions that do create liabilities. It encompasses official and private sales and purchases of financial assets, such as bonds, and reflects changes in a country’s financial position.
- Factor Income: The net of payments received and payments made on investments overseas. It includes income earned on investments in foreign countries, such as dividends or interest, and is part of the current account.
- Remittances: Money received from another country that is not in exchange for a good, service, or financial asset. Remittances typically refer to funds sent by individuals working abroad to support their families or households in their home country.