Question : The balance of payments is a:
Option 1: Snapshot of a country's economic transactions at a specific point in time
Option 2: Projection of a country's future economic performance
Option 3: Comparison of a country's exports and imports over a given period
Option 4: Record of a country's stock of foreign assets and liabilities
Correct Answer: Snapshot of a country's economic transactions at a specific point in time
Solution : The correct answer is (a) Snapshot of a country's economic transactions at a specific point in time.
The balance of payments is a systematic accounting record of all economic transactions between residents of a country and the rest of the world over a specific period, usually a year. It provides a snapshot or a summary of these transactions at a given point in time.
The balance of payments includes various components such as the current account, capital account, and financial account. The current account reflects trade in goods and services, income flows, and unilateral transfers, while the capital and financial account records capital flows and changes in foreign assets and liabilities.
So, to clarify, the balance of payments is a record or snapshot of a country's economic transactions at a specific point in time, which covers its trade, financial flows, and other economic interactions with the rest of the world.
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