Question

Which of these reflect a country's record of all international transactions?

• A. Balance of trade
• B. Balance of payment
• C. Statement of accounts
• D. Appropriation account

Answer 1

Answer: (B)

Balance of payment

The balance of payments account comprises of the current account and the capital account. The current account consists of the visible and invisible imports and exports of the country as well as unilateral transfers and income receipts and payments. The capital account includes the capital receipts and capital payments such as portfolio investments. It may also maintain an official reserve account to run either a fixed exchange rate regime or a managed float regime. It accounts the country's transactions with the rest of the world. Thus it includes a country's international trading, borrowing and lending.