Question

what is balance of payment? describe any four methods to correct adverse balance of payments

Answer 1

•The balance of payments, also known as balance of international payments and abbreviated B.O.P. or BoP, of a country is the record of all economic transactions between the residents of the country and t of world in a particular period of time.
Four methods are -
1. Trade Policy Measures
2. Expenditure - Reducing Policies
3. Expenditure – Switching Policies
4. Exchange Control

Answer 2

The Balance Of Payments (BOP) is the method by which nations compute all of the international monetary transactions within a specific period. The BOP comprises three main accounts that is the current account, the capital account, and the financial account.

Four Methods To Correct Adverse Balance Of Payments

• Trade Policy Measures by Expanding Exports and Restraining Imports. Exports may be facilitated by reducing or repealing export duties and lowering the interest rate on credit used for financing exports.
• Expenditure-Reducing Policies by The two important tools for lessening aggregate expenditure are the use of Tight monetary policy and Contractionary fiscal policy.
• Expenditure Switching Policies through Devaluation. Prices of imports are risen by making domestically elicited goods relatively cheaper.
• Exchange Control is where all the exporters are asked to resign their foreign exchange to the central bank of a country and it is then rationed out among the licensed importers.

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