Question 4

The balance of payments (BOP) is a statement of all the international transactions of a country with the rest of the world over a given period. Transactions include trade in goods, services, financial assets and international flows of income and gifts.

a) When central banks publish data about balance of payments, what other analytical data do central banks present? (1 Mark)

b) Business managers and investors need BOP data to anticipate changes in host- country economic policies that might be driven by BOP events. From the perspective of business managers and investors, briefly explain THREE (3) specific signals that a country's BOP data can provide. (9 Marks)