Balance of payment surplus implies that receipts for exports are

Analyze the question: It asks what a balance of payments (BOP) surplus means in terms of export receipts compared with import payments.

Concept: The balance of payments records all transactions between a country and the rest of the world. There are three possible positions:

• Surplus: money coming in is greater than money going out
• Deficit: money going out is greater than money coming in
• Equilibrium (balance): inflows equal outflows

Step-by-step solution:

1. A surplus means the country earns more from abroad than it spends abroad.
2. Earnings from abroad come mainly from the receipts from exports.
3. Spending abroad comes mainly from the payments for imports.
4. So a surplus means export receipts > import payments.

Checking the options:

• A. At par (equal) describes equilibrium, not a surplus.
• B. Greater than payments for imports describes a surplus.
• C. Less than payments for imports describes a deficit.
• D. Proportional is not a recognized BOP position.

Exam tip: Think of your own pocket money. If more money comes in than goes out, you have a surplus. For BOP: Surplus = Exports more, Deficit = Imports more. A mnemonic is "Surplus = Selling abroad more than buying."