Question

Economists sometimes describe the balance of trade as the balance of payments, because:___________

a. they are mistaking the flow of goods with the flow of money
b. each category of the current account balance involves a corresponding flow of payments in the same direction
c. each category of the current account balance involves a corresponding flow of payments in the opposite direction
d. its financial capital outflows are equal to the inflows

Answer 1

Answer: b. each category of the current account balance involves a corresponding flow of payments in the same direction

Explanation:

For every purchase made or sales that sold, a corresponding payment needs to be made or received.

The balance of payment therefore allows for us to be able to figure out the amount that was traded because it would be the payment received less receives.