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Balance of Payments with Financial Accounts: Measuring Foreign Trade

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Why is the balance of payments useful for understanding the state of the economy?

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1. Which two components make up the balance of payments account?

2. _____ are payments made by those in the domestic economy to purchase financial and physical assets in other countries.

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About This Quiz & Worksheet

This quiz and corresponding worksheet will help you gauge your understanding of what a country's balance of payments is. Topics you'll need to know to pass the quiz include understanding the two components that make up the balance of payments account of a country.

Quiz & Worksheet Goals

Use these assessment tools to assess your knowledge of:

  • The term for a record of the transactions between a country's residents and the residents of foreign nations
  • The two components making up the balance of payments
  • The term for domestic payments made to purchase assets in other nations and what type of money flow this is
  • Calculating the balance of payments given money inflows and outflows
  • Facts about financial account surpluses

Skills Practiced

This worksheet and quiz will let you practice the following skills:

  • Defining key concepts - ensure that you can accurately define main phrases, such as domestic and foreign
  • Reading comprehension - ensure that you draw the most important information from the related lesson on balance of payments with financial accounts
  • Interpreting information - verify that you can read information regarding how to calculate the balance of payments and interpret it correctly
  • Knowledge application - use your knowledge to answer questions about the financial-capital account

Additional Learning

To learn more about a country's balance of payments, review the corresponding lesson on the Balance of Payments with Financial Accounts. This lesson covers the following objectives:

  • Define balance of payments
  • Differentiate between the current account and financial account
  • Explore the components of the financial-capital account
  • Understand how to measure surplus and deficit
  • Recognize the importance of the financial-capital account
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