Balance of Payments

C O N C E P T C H E C K

BALANCE OF PAYMENTS

GAME RULES

ROUND 1 (24 players)2 players per groupThe player who has more correct answers out of 5 MCQs wins and proceed to the next round

ROUND 2 (12 players)2 players per group and 2 persons who were eliminated in round 1 will check answersThe player who has the higher number of points wins and proceed to the next round. In the event of a tie, both players proceed to the next round

GAME RULES

ROUND 3 (6 players)Team round. Form 2 groups. The team with the highest points wins and proceed to the next round• Team has 1 lifeline to anyone from the eliminated

group to help them

ROUND 4 (3-4 players)The player with the highest points wins.

ROUND 1: QUESTION 1

The Balance of Payments A. Is the value of all the economic transactions

between residents of the country with the rest of the world

B. Is a summary statement of the money value of all economic transactions between the residents of the country with the rest of the world

C. Is a summary statement of the value of exports, imports and investment between residents of the country with the rest of the world

D. comprises of current, capital and finance accounts

ROUND 1: QUESTION 1

The Balance of Payments A. Is the value of all the economic transactions between

residents of the country with the rest of the worldB. Is a summary statement of the money value of

all economic transactions between the residents of the country with the rest of the world

C. Is a summary statement of the value of exports, imports and investment between residents of the country with the rest of the world

D. comprises of current, capital and finance accounts

ROUND 1: QUESTION 2

The difference between a country's merchandise exports and its merchandise imports is theA. Balance of paymentsB. Current accountC. Financial accountD. Balance of Trade

ROUND 1: QUESTION 2

The difference between a country's merchandise exports and its merchandise imports is theA. Balance of paymentsB. Current accountC. Financial accountD. Balance of Trade

ROUND 1: QUESTION 3

The four subdivisions in the current account areA. Trade in goods, trade in services, net income

flow and net current transfersB. Goods balance, service balance, net income

balance and net government transfersC. Visible trade balance, invisible trade balance,

Net property income from abroad and current transfers

D. Visible trade balance, Invisible trade balance, Financial account and capital account

ROUND 1: QUESTION 3

The four subdivisions in the current account areA. Trade in goods, trade in services, net

income flow and net current transfersB. Goods balance, service balance, net income

balance and net government transfersC. Visible trade balance, invisible trade balance,

Net property income from abroad and current transfers

D. Visible trade balance, Invisible trade balance, Financial account and capital account

ROUND 1: QUESTION 4

Which of the following does not belong to the financial account?A. Samsung building factories in SingaporeB. A Singaporean buying American government

bondsC. An American firm buying machines that make

fishballs from a Singapore firmD. Hot money flowing from America to China due

to higher interest rates

ROUND 1: QUESTION 4

Which of the following transaction does not belong to the financial account?A. Samsung building factories in SingaporeB. A Singaporean buying American government

bondsC. An American firm buying machines that

make fishballs from a Singapore firmD. Hot money flowing from America to China due

to higher interest rates

ROUND 1: QUESTION 5

Which of the following statements is correct?A. If the current account is in surplus, then the

capital account must also be in surplus.B. The overall sum of all the entries in the balance

of payments must be zero.C. The overall sum of all the entries in the balance

of payments must be positive.D. the current account is in deficit, then the capital

account must also be in deficit.

ROUND 1: QUESTION 5

Which of the following statements is correct?A. If the current account is in surplus, then the

capital account must also be in surplus.B. The overall sum of all the entries in the

balance of payments must be zero.C. The overall sum of all the entries in the balance

of payments must be positive.D. the current account is in deficit, then the capital

account must also be in deficit.

ROUND 2: QUESTION 1

State 3 possible underlying causes of a country’s worsening current account and the subdivision of the current account it affects. (6 points)

ROUND 2: QUESTION 1

Possible answers 1 point for the correct subdivision of the current account and 1 point for a current underlying cause(any factors that results in an increase in import expenditure, decrease in export revenue or income and current flows):• Decrease in the country’s exports due to lost of

export competitiveness (1), unfair trade practices (1)• Increase in the country’s imports due to increase in

income (1), increase consumption of capital good due to development/ industralization (1)

ROUND 2: QUESTION 2

State 3 possible underlying causes of a country’s improvement in the financial account and the subdivision of the account it affects. (6 points)

ROUND 2: QUESTION 2

1 point for the correct subdivision of the financial account and 1 point for a current underlying causePossible answers (any factors that affect direct investment, portfolio investment or short term capital flow)• Increase in short term capital inflow due to increase

in interest rates relative to other countries• Increased political stability leading to more direct

investment flowing into the country• Tax holidays for foreign direct investment that leads

to more direct investment flowing into the country

ROUND 2: QUESTION 3

With the aid of a diagram, explain 2 possible effects on the economy when there is an improvement in her balance of trade (4 points).

ROUND 2: QUESTION 3

1 point for each effect explained and 1 point for current reflection on diagram.Increase in national income, increase in prices, decrease in unemployment

ROUND 3: TEAM ROUND

There are 3 questions for this round.Each team has 10 minutes to write their responses on the board.The team with the highest number of points winsIn the event of a draw, an extra question will be given.Each team can seek help from 1 person among those who have been eliminated.

ROUND 3: QUESTIONS

1. Explain what is meant by an undervaluation of Yuan (1 point)

2. Draw the tariff diagram and label the change in imports and effects of tariff clearly. (6 point)

3. Compare the effects of tariffs and quotas (6 points).

4. Draw a subsidy diagram to show a fall in price, a rise in quantity and export revenue (4 points).

ROUND 4: FINAL ROUND

The person with the best summary of BOP as voted by the rest of the class wins. Free medium.

You have 10 minutes for this task.