Question

A change in exchange rate leads to a change in supply and demand of foreign goods in the domestic market and domestic goods in the foreign market. This also leads to an imbalance in the balance of payments. What is Balance of Payments?

• A. Balance of payments is the statement of a country’s trade with other nations.
• B. Balance of payments is the money a country owes other nations.
• C. Balance of payments is the money owed to a country from another nation.
• D. None of the above

Answer 1

Answer: (A)

Balance of payments is the statement of a country’s trade with other nations.

Answer 2

The correct option is (A): Balance of payments is the statement of a country’s trade with other nations.