ZIMSEC O Level Commerce Notes: Balance of Payments (B.O.P)
Balance of payments (B.O.P)
- This is the difference between Zimbabwe’s total earnings (receipts) and total expenditure.
- Exported goods and services less imported goods and services.
- It is calculated for a given year.
- When the total for exports exceeds the total for imports it is known as a favourable balance.
- When the total for exporters is exceeded by the total for imports it is known as an unfavourable balance.
- A favourable balance is also known as a surplus.
- An unfavourable balance is also known as a deficit.
- For example:
- Zimbabwe, in a given year, exported goods worth $5 billion and services worth $2 billion.
- In the same year it imports goods worth $7 billion and services worth $3 billion.
- The Balance of Payments would be calculated as follows:
- BOP=exports( goods+services exported) – imports (goods + services imported)
- = (5+2) – (7+2)
- =$2 billion dollars deficit.
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