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Balance of Payments

Balance of Payments. Concept check. Game rules. ROUND 1 (24 players) 2 players per group The 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 answers

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Balance of Payments

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  1. Balance of Payments Concept check

  2. Game rules ROUND 1 (24 players) 2 players per group The 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 answers The 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

  3. 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.

  4. Round 1: Question 1 The Balance of Payments • Is the value of all the economic transactions between residents of the country with the rest of the world • Is a summary statement of the money value of all economic transactions between the residents of the country with the rest of the world • Is a summary statement of the value of exports, imports and investment between residents of the country with the rest of the world • comprises of current, capital and finance accounts

  5. Round 1: Question 1 The Balance of Payments • Is the value of all the economic transactions between residents of the country with the rest of the world • Is a summary statement of the money value of all economic transactions between the residents of the country with the rest of the world • Is a summary statement of the value of exports, imports and investment between residents of the country with the rest of the world • comprises of current, capital and finance accounts

  6. Round 1: Question 2 The difference between a country's merchandise exports and its merchandise imports is the • Balance of payments • Current account • Financial account • Balance of Trade

  7. Round 1: Question 2 The difference between a country's merchandise exports and its merchandise imports is the • Balance of payments • Current account • Financial account • Balance of Trade

  8. Round 1: Question 3 The four subdivisions in the current account are • Trade in goods, trade in services, net income flow and net current transfers • Goods balance, service balance, net income balance and net government transfers • Visible trade balance, invisible trade balance, Net property income from abroad and current transfers • Visible trade balance, Invisible trade balance, Financial account and capital account

  9. Round 1: Question 3 The four subdivisions in the current account are • Trade in goods, trade in services, net income flow and net current transfers • Goods balance, service balance, net income balance and net government transfers • Visible trade balance, invisible trade balance, Net property income from abroad and current transfers • Visible trade balance, Invisible trade balance, Financial account and capital account

  10. RouND1: Question 4 Which of the following does not belong to the financial account? • Samsung building factories in Singapore • A Singaporean buying American government bonds • An American firm buying machines that make fishballs from a Singapore firm • Hot money flowing from America to China due to higher interest rates

  11. RouND1: Question 4 Which of the following transaction does not belong to the financial account? • Samsung building factories in Singapore • A Singaporean buying American government bonds • An American firm buying machines that make fishballs from a Singapore firm • Hot money flowing from America to China due to higher interest rates

  12. Round 1: Question 5 Which of the following statements is correct? • If the current account is in surplus, then the capital account must also be in surplus. • The overall sum of all the entries in the balance of payments must be zero. • The overall sum of all the entries in the balance of payments must be positive. • the current account is in deficit, then the capital account must also be in deficit.

  13. Round 1: Question 5 Which of the following statements is correct? • If the current account is in surplus, then the capital account must also be in surplus. • The overall sum of all the entries in the balance of payments must be zero. • The overall sum of all the entries in the balance of payments must be positive. • the current account is in deficit, then the capital account must also be in deficit.

  14. 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)

  15. 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)

  16. 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)

  17. Round 2: Question 2 1 point for the correct subdivision of the financial account and 1 point for a current underlying cause Possible 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

  18. 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).

  19. 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

  20. 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 wins In 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.

  21. Round 3: questions • Explain what is meant by an undervaluation of Yuan (1 point) • Draw the tariff diagram and label the change in imports and effects of tariff clearly. (6 point) • Compare the effects of tariffs and quotas (6 points). • Draw a subsidy diagram to show a fall in price, a rise in quantity and export revenue (4 points).

  22. 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.

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