Practice Concept Of Surplus And Deficit (1.2) - Chapter 4: Balance of Payments and Exchange Rate

Practice: Concept of Surplus and Deficit

Lesson 1.2Balance of Payments and Exchange Rate

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9 questions

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3 cards from this section. Quick, good the night before a test.
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6 questions · about 4 min · pass mark 70%. Hints available.
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3 questions · about 2 min · pass mark 70%. Hints available.
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6 sample questions

Question 1.
Define what constitutes a surplus in terms of Balance of Payments.
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Think about the relationship between exports and imports.
Question 2.
What is a deficit?
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Consider what happens when imports exceed exports.
3Question 3.
What is a surplus?
- A situation where outflows exceed inflows
- A situation where inflows exceed outflows
- An equal balance of inflows and outflows
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Remember what gets counted as inflows.
4Question 4.
A deficit can lead to increased foreign debt. True or False?
- True
- False
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Think about consequences of not having enough reserves.
Question 5.
Given a country experiences a consistent surplus, analyze how this may impact its exchange rate and foreign investment strategies.
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Consider how stronger currency might influence investor perceptions.
Question 6.
If a government realizes it has been running a deficit for three consecutive quarters, propose potential strategies it might adopt to amend this situation.
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Think about economic adjustments that can realign imports and exports.

5 more questions in this section. Enroll free to practise them all.