Balance of Payments­ Worksheet

1. Distinguish between an import and an export:
1. Import- something that is brought into a country.
2.  Export- something that goes out of the country.
1. Visible and invisible trade: 
1. visible trade: Imports and exports of physical merchandise, something you can actually see and touch.     
2.  Invisible trade: Services and other products that do not result in the transfer of physical objects.things you can't touch.
   
   
2. State whether the following are
1. an export or an import for Hong Kong
2. visible trade or invisible trade
1. A HK toy sold in UK - Export, visible trade
2. French cheese sold in HK. - Import, visible trade
3. A HK tourist holidaying in Thailand - Export, invisible trade
4. Cathay Pacific buying planes from Airbus - Import, visible trade
5. The HK Police Force buying Russian weapons - Import, visible trade
6. An Australian tourist staying at HK Disneyland - Import, invisible
   
   
3. In which part of the HK Balance of Payments account would the following transactions be recorded: 
1. A US company buying shares on the HK stock market -Financial account
2. HK citizen sending wages earned in UK back to HK - Current account
3. A HK company selling prawns direct to France - Current account
4. An Italian firm investing in a chain of restaurants - Financial account
5. HK company paying dividends to US shareholder - Current account
   
   
4. Which of the above transactions are inflows of money to HK (and are therefore credits on the balance of payments account) and which are outflows (and thus debits)? 
1. Credit- 
1. HK citizen sending wages earned in UK back to HK
2. A HK company selling prawns direct to France
3. An Italian firm investing in a chain of restaurants
2. Debit-
1. HK company paying dividends to US shareholder
2. A US company buying shares on the HK stock market
   
   
5. The fictitious figures below refer to HK’s balance of payments for 2007, 08, 09 and 2010 Calculate for each year

1. Balance on trade in goods
2. Balance on trade in services 
3. The balance of trade 
4. The current account balance
   

2007 

1. Balance on trade in goods:  42,345 - 57,600 = -15,255
2. Balance on trade in services: 654,000 - 124,000 = 530,000
3. The balance of trade: -15,255 + 530,000 = 514,745
4. The current account balance: 514,745 -12,500 - 34,000 = 468,245

2008 

1. Balance on trade in goods: 123,000 - 245,789 = -122,789
2. Balance on trade in services: 12,789 - 9,876 =  2,913
3. The balance of trade: -122,789 + 2,913 = -119,876
4. The current account balance: -119,876 + 123,765 + 47,987 = 51,876

2009 

1. Balance on trade in goods: 56,363 - 66,666 = -10,303
2. Balance on trade in services: 46,879 - 38,945 = 7,934
3. The balance of trade: -10,303 + 7,934 = -2,369
4. The current account balance: -2,369 + 100,000 - 99,999 = -2,368

2010 

1. Balance on trade in goods: 853,970 - 900,000 = -46,030
2. Balance on trade in services: 345,876 - 200,000 = 145,876
3. The balance of trade: -46,030 + 145,876 = 99,846
4. The current account balance: 99,846 + 0 + 34,987 = 134,833