Sandeep Garg Macroeconomics Class 12 - Chapter 12: Balance of Payments

Sandeep Garg Class 12 Macroeconomics Solutions Chapter 12: Balance of Payments are explained by the expert Economics teachers from the latest edition of Sandeep Garg Macroeconomics Class 12 textbook solutions.

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Here are some questions with solutions on the topic of Balance of Payments.

Sandeep Garg Solutions Class 12 – Chapter 12 – Part B

Question 1

What are the two components of the Balance of Payment account?

Answer:

The two components of the Balance of Payment account are:

• Current account
• Capital account

Question 2

Define balance of payment.

Answer:

Balance of payment is an accounting statement that provides a systematic record of all the economic transactions between the residents of a country and the rest of the world during a given period of time.

Question 3

What are the two alternative names of the balance of trade?

Answer:

The two alternative names of the balance of trade are:

• Balance of visible trade
• Trade balance

Question 4

Name the items included in the balance of trade account.

Answer:

The items included in the balance of trade account are:

• Exports of visible items (goods)
• Imports of visible items (goods)

Question 5

What is the current account?

Answer:

The current account refers to the account which records all the transactions relating to export and import of goods, services, and unilateral transfers during a given period of time.

Explore link: Government Budget and the Economy Solutions

Question 6

What is the capital account?

Answer:

The capital account of the balance of payment records all the transactions, between the residents of a country and the rest of the world, which cause a change in all assets or liabilities of the residents of the country or its government.

Question 7

Define trade deficit.

Answer:

A trade deficit means excess import of goods and services over exports of goods.

Question 8

When will there be a surplus in the Balance of Trade account?

Answer:

It is when the exports of visible items are more than imports of the visible items.

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