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Balance of Payments Concept check.

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Presentation on theme: "Balance of Payments Concept check."— Presentation transcript:

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 RouND 1: 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 RouND 1: 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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