Global Cash Flow: Unveiling Secrets of Balance of Payments

1. What is the meaning of Balance of Payments?

2. What are the various types of transactions recorded in the Balance of Payments?

3. Balance of Payments must always balance. What does it mean?

4. The Balance of Payments (BOP) is a systematic record of all economic transactions made between residents of one country and the rest of the world over a specific period, usually a year. What does the word “residents” signify in the above sentence?

5. Is it correct that certain category of persons who though work and operate within the domestic territory of the country, are not included in the term “residents” of Balance of Payments?

6. What is the significance of Balance of payments for the economists, policymakers and investors?

7. How Balance of payments data is useful for Governments and Central Bank?

8. Balance of Payments adheres to a principle of accounting. Name that principle?

9. What are the various components of Balance of Payments?

10. What do these components of balance of payments signify?

11. What is meant by errors and omissions in Balance of Payments?

12. What is the importance of errors and omissions item in Balance of Payments?

Why is it that Balance of Payments is always balanced in the accounting sense but not necessarily equal in the economic sense?

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