When Is a Balance of Payments Account Out of Balance

question 153

Multiple Choice

When is a balance of payments account out of balance?

• A)only when exports are greater than imports
• B)only when imports are greater than exports
• C)when exports are either greater or less than imports
• D)only when exports are greater or less than imports over a sustained period
• E)never

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Definitions:

Equivalent Variation

A measure in economics that calculates the change in wealth needed to reach utility before a price change, preserving consumer satisfaction levels.

Utility Function

An equation that quantifies how different combinations of goods or services provide different levels of happiness or satisfaction to an individual.

Consumer's Surplus

The disparity between what consumers are prepared and capable of spending for a product or service and the actual amount they end up paying.

Price of Earplugs

The amount of money required to purchase a set of earplugs, often dependent on brand, quality, and quantity.