Question

Nakato, a South Asian country, exported goods worth $500 million and imported goods worth $400 million in the last fiscal year. The country also made foreign investments worth $300 million and provided foreign aid worth $100 million in disaster relief. Besides this, the country took a loan of $5 billion from the World Bank. This flow of money into and out of Nakato is measured by _____.

Answer 1

(D) Balance of Payments.

Step-by-step explanation:

Balance of payments accounts are the books of a country where it saves all the transactions between own country’s citizens and the rest of the world.

It includes three accounts, i.e. current account, capital account and financial accounts.

Here, following exchanges are included in Balance of Payments

Goods for goods: Like in the case, exported $500 million goods for $400 million goods

Services for goods: This happens when one country provide goods for other’s services

Services for services: Services are exchanged between two countries

Services and goods for money: Both services and goods are exchanged for money, like international projects.

Answer 2

This flow of money into and out of Nakato is measured by 'Balance of payments'.

Step-by-step explanation:

We are asked to determine the type of flow of money into and out of Nakato.

We know that a systematic record that represents all economic transaction between the residents of a country and rest of world in a given time period is known as balance of payments.

This transaction can be in different forms.

• The exchange of goods for goods,

• Services for goods,

• Services for services,

• Services and goods for money.

Therefore, the given flow of of money into and out of Nakato is measured by 'Balance of payments'.