Differentiate between improving terms of trade and deteriorating terms of trade.

Question 13:
Julie's transactions during her travel in Bali (Indonesia) involve spending money on services like accommodation, food, and activities. These are recorded in the current account of the balance of payments. Specifically, they fall under the services sub-account.

The account would be:

• Current Account (Services)

Question 14:
Terms of trade refer to the ratio of a country's export prices to its import prices.

• An improving terms of trade means that a country's export prices have risen relative to its import prices. This allows the country to buy more imports for the same amount of exports.
• A deteriorating terms of trade means that a country's export prices have fallen relative to its import prices. This requires the country to export more to buy the same amount of imports.

Question 15:

I. BSP Fiji pays the dividends to Papua New Guinean shareholders.

• Outflow (from Fiji)

II. Australian pilot is paid his monthly salary by Air Niugini.

• Outflow (from Papua New Guinea)

III. Jera exported her coffee direct to German.

• Inflow (to Jera's country)

IV. Stephanie just bought a Japanese used car through the Internet.

• Outflow (from Stephanie's country)

V. OX & Palm just exported its product to Fiji.

• Inflow (to OX & Palm's country)