Instructor’s Manual
CHAPTER 10
THE BALANCE OF PAYMENTS
CHAPTER OVERVIEW
In this chapter, we examine the monetary aspects of international trade by considering the nature and significance of
a nation’s balance of payments. The chapter begins by discussing the concept of the balance of payments. An
After completing this chapter, the student should be able to:
• Define the balance of payments.
• Identify the credit and debit transactions on the balance of payments.
BRIEF ANSWERS TO STUDY QUESTIONS
1. The balance of payments is a record of the monetary transactions between residents of one country and the
rest of the world that occur over the course of a one-year period.
2. The receipt of dollars from foreigners results from the following transactions: (1) merchandise exports, (2)
transportation-travel receipts, (3) income received from foreign investments abroad, (4) gifts received from
