What are the two main accounts under balance of payment?

Here are the answers to the multiple-choice questions: QUESTION 1 What are the two main accounts under balance of payment? C. Capital and current account The Balance of Payments is primarily divided into the Current Account (which records trade in goods and services, income, and current transfers) and the Capital Account (which records capital transfers and the acquisition/disposal of non-produced, non-financial assets). The Financial Account is often considered alongside or as part of the Capital Account. The correct answer is C. QUESTION 2 What does terms of trade measure? A. The number of imports that can be bought with the foreign currency earned from a given volume of exports. The terms of trade measure the ratio of a country's export prices to its import prices, indicating the purchasing power of its exports in terms of imports. The correct answer is A. QUESTION 3 Which of the following would result if there is balance of payment deficit in the country? C. Decrease in production and National income A balance of payments deficit means that a country is spending more foreign currency than it is earning. A persistent deficit can lead to a depreciation of the domestic currency, a reduction in foreign exchange reserves, and potentially a contraction in aggregate demand, which can result in a decrease in domestic production and national income. The correct answer is C. QUESTION 4 Joe insures his business with an Australian insurance company. This transaction will be recorded as a/an: A. invisible import Insurance is a service, making it "invisible." When a domestic resident (Joe) pays a foreign company (Australian insurance company) for a service, it represents an outflow of money from the domestic country, hence it is an import of a service. The correct answer is A. QUESTION 5 Johnson family came from Australia to visit the Goroka cultural show during 35th independence celebration. This transaction will be recorded as a/an: B. invisible export Tourism is a service, making it "invisible." When foreign residents (Johnson family from Australia) visit a country and spend money, they are consuming services provided by the host country. This inflow of money for services rendered is considered an export of services from the host country's perspective. The correct answer is B. Last free one today — make it count tomorrow, or type /upgrade for unlimited.