Question

BOP (Balance of Payment) refers to

• A. transactions in the flow of capital
• B. transactions relating to receipts and payment of invisibles
• C. transactions relating only to exports and imports
• D. systematic record of all its economic transaction with the rest of the world

Answer 1

Answer: (D)

systematic record of all its economic transaction with the rest of the world

The balance of payments (BOP) is a statement of all transactions made between entities in one country and the rest of the world over a defined period of time, such as a quarter or a year. The balance of payments tracks international transactions. When funds go into a country, a credit is added to the balance of payments (“BOP”). When funds leave a country, a deduction is made. For example, when a country exports 20 shiny red convertibles to another country, a credit is made in the balance of payments. Importance of Balance of Payments. As pointed out above, Balance of Payments is a very important record of financial transactions and status of any nation and its economy. It highlights the direction of economic growth or otherwise of any country and is a ground on which many important policy decisions are based.