Skip to main content
Back

Balance of Payments: Current Account quiz

Control buttons has been changed to "navigation" mode.
1/15
  • What does the current account of the balance of payments record?
    It records short-term transactions with other countries, including net exports, investment income, and net transfers.
  • What are the three main components of the current account?
    The three main components are net exports, net investment income, and net transfers.
  • How are net exports calculated in the current account?
    Net exports are calculated as exports minus imports of both goods and services.
  • What is the balance on goods also known as?
    The balance on goods is also called the balance of trade.
  • What does a trade deficit indicate?
    A trade deficit indicates that a country imports more goods than it exports.
  • What is a trade surplus?
    A trade surplus occurs when a country exports more goods than it imports.
  • Which country is a major source of U.S. imports contributing to its trade deficit?
    China is a major source of U.S. imports contributing to the U.S. trade deficit.
  • What is included in net investment income in the current account?
    Net investment income includes interest and dividends earned by citizens from foreign assets and by foreigners from domestic assets.
  • If a U.S. citizen earns interest from a Japanese bond, how is this recorded?
    It is recorded as part of the U.S. net investment income in the current account.
  • What does a positive net investment income mean for the U.S.?
    It means that Americans are earning more from foreign investments than foreigners are earning from U.S. investments.
  • What are net transfers in the current account?
    Net transfers are funds sent between countries, such as foreign aid, remittances, and pension payments.
  • Why does the U.S. generally have a negative balance in net transfers?
    Because the U.S. sends more funds abroad, mainly through foreign aid and remittances, than it receives.
  • Which category is the largest in the current account?
    Net exports are the largest category in the current account.
  • How do you calculate total net exports in the current account?
    Total net exports are calculated by adding the balance on goods to the balance on services.
  • What is an example of a net transfer involving a U.S. resident?
    An example is a U.S. immigrant sending money to family members in their home country.