Exploring Meaning, Significance, and Components of Balance of Payments

1. What is the meant by Balance of Payments?
2. Balance of Payments must always balance. What does it mean?
3. What does the word “residents” mean in the definition of Balance of Payments?
4. What is the significance of Balance of payments?
5. What are the various components of Balance of Payments?
6. What is meant by errors and omissions in Balance of Payments?
7. What is the significance of errors and omissions item in Balance of Payments?

Do you agree with the statement that Balance of Payments is always balanced in the accounting sense but not necessarily equal in the economic sense?