Question

1. The “Balance on Goods” component in the balance of payments (BOP) account of a country refers to the exports and imports of intangible goods such as toys, clothing, and computers. (TRUE/FALSE)

2. If an American buys a bond issued by Canadian government, then the periodic interest income received on the bond is an example of primary income (credit) to be included in the current account of the U.S. balance of payments. (TRUE/FALSE)

3. An example of unilateral transfer would be an American church donates five tons of rice to the Sudan to help with famine relief. (TRUE/FALSE)

4. The total global remittances were estimated at $689 billion in 2018. (TRUE/FALSE)

5. There are two periods of large current account deficits in the US: one lasted through most of the 1980s, while another began in the early 1990s and continues today. (TRUE/FALSE)

Answer 1

1. True

Balance of good does give an idea on the trade balance of a country in the intangible goods. Country is either at a trade deficit and trade surplus.

2. False

It is true that Balance of payments include all the international monetary transactions including bonds. But the income generated in this case is credited to the financial account rather than the current account which gives idea about the goods and services, but not bonds and othe financial instruments

3. True

An unilateral transfer is said to occur when the transfering party doesn't get any good, money or service in return, i.e. a transfer taking place 'unilaterally'. So, in this case, an unilateral transfer of rice occurs from American Church to Sudan

4. True

The global remittances grew by 10% in 2018 totaling upto $689 Billion

5. False

It is true that the account deficit of US began and persisted in the 80s, but there was a break in this and some surplus did occur. The late 90s (around 1998) saw an account deficit once again. That is continued till date.

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