Question

A country's balance of payments is divided up into three categories, the

current account, capital account and financial account. The current account
mainly measures
A) the flow of credit.
B) the flow of goods and services.
c) purchases and sales of nonfinancial assets.
D) purchases of sales of stocks and bonds and other financial assets.

Answer 1

B) the flow of goods and services

Explanation:

Balance of payments (BOP) is a statement of all transactions made between one country and the rest of the world at a particular period of time. It is also called balance of international payment. BoP is divided into current and capital account.

1. The current account: This is account of country's net trade in goods and services, net earnings on cross-border investments, and its net transfer payments. The current account measures the flow of goods and services.

2. The capital account: This is a country's imports and exports of capital and foreign aid. It can also be called financial account.

The sum of all transactions recorded in the balance of payments should be zero.

Balance of payment deficit is when a country's import is higher than its export.

Balance of payment surplus is when a country's export is greater than its import.