When Comparing a Nation's Balance of Trade with Its Balance

question 35

Multiple Choice

When comparing a nation's balance of trade with its balance of payments,which statement is true?

• A)The two concepts should yield the same value, because the value of goods traded must equal the total payments made to buy those goods.
• B)The balance of payments includes the balance of trade, but it also includes other financial flows such as foreign borrowing and lending.
• C)The balance of trade includes exports and imports only of goods, while the balance of payments includes exports and imports of both goods and services.
• D)These two concepts are totally unrelated, so comparing them is not really meaningful.

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Definitions:

Alternative Hypothesis

A hypothesis that contradicts the null hypothesis, suggesting that there is a significant effect or difference.

Inferential Statistics

Statistical procedures used to test hypotheses and draw conclusions from data collected during research studies.

Degrees of Freedom

The number of independent values in a statistical calculation that can vary without violating the given constraints.

Significance Level

A threshold used in statistical hypothesis testing to determine whether to reject the null hypothesis, typically denoted as alpha (α).