lesson

Balance of payments

After you have worked through this section of the learning unit, you should be able to

describe the balance of payments
identify the subaccounts of the balance of payments

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Study Instructions

Study the introduction and the first part of the balance of payments in chapter 7.1 of the textbook.

Do the activities.

Introduction
Activities

Introduction

Balance of payments: Activities

1 The balance of payments is a balance sheet which represents the total international assets and liabilities of a country.

True

Incorrect. The statement is false.

The balance of payments is a systematic statistical summary or record of all economic transactions between South Africa and the rest of the world.

False

Correct. The statement is indeed false.

The balance of payments is a systematic statistical summary or record of all economic transactions between South Africa and the rest of the world.

2 The balance of payments is a systematic statistical summary or record of economic transactions (physical goods, services, etc.), excluding financial transactions, between South Africa and the rest of the world.

True

Incorrect. The statement is false.

It also includes financial transactions.

False

Correct. The statement is indeed false.

It also includes financial transactions.

3 While most of the items in the balance of payments are flow concepts, the borrowing of funds from the rest of the world is regarded as a stock concept.

True

Incorrect. The statement is false.

What is recorded in the balance of payments is not the level of foreign debt, but the foreign borrowing that took place during a specified period. It is therefore a flow concept.

False

Correct. The statement is indeed false.

What is recorded in the balance of payments is not the level of foreign debt, but the foreign borrowing that took place during a specified period. It is therefore a flow concept.

4 The current account and the financial account are both subaccounts of the balance of payments.

True

Correct. The statement is indeed true.

The current and financial accounts are two important subaccounts of the balance of payments.

False

Incorrect. The statement is true.

The current and financial accounts are two important subaccounts of the balance of payments.

5 The data for the balance of payments is available at current (nominal) and constant prices.

True

Incorrect. The statement is false.

The data is only available at current (nominal) prices.

False

Correct. The statement is indeed false.

The data is only available at current (nominal) prices.

6 For every credit transaction there is a debit transaction and for every debit transaction there is a credit transaction.

True

Correct. The statement is indeed true.

The balance of payments uses a double-entry accounting system.

False

Incorrect. The statement is true.

The balance of payments uses a double-entry accounting system.

Concepts

Balance of payments

A systematic statistical summary or record of all economic transactions between South Africa and the rest of the world.

Purchasing power parity (PPP)

Current account

Glossary

lesson

Balance of payments

Study Instructions

Introduction

Balance of payments: Activities

1 The balance of payments is a balance sheet which represents the total international assets and liabilities of a country.

2 The balance of payments is a systematic statistical summary or record of economic transactions (physical goods, services, etc.), excluding financial transactions, between South Africa and the rest of the world.

3 While most of the items in the balance of payments are flow concepts, the borrowing of funds from the rest of the world is regarded as a stock concept.

4 The current account and the financial account are both subaccounts of the balance of payments.

5 The data for the balance of payments is available at current (nominal) and constant prices.

6 For every credit transaction there is a debit transaction and for every debit transaction there is a credit transaction.

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