2.1 Government and the Economy: Unit 28 - 30 Flashcards
- What is Balance of payments?
- record of all transactions relating to international trade.
- What are the 2 parts of BOP?
- current account
- capital and financial account
- What is a current account? Capital and Financial account?
Current account- part of the balance of payments where all exports and imports are recorded.
Capital and Financial accounts are part of the balance where a flow of savings, investments, and currencies are recorded.
- What are exports? imports?
exports: goods and services sold overseas
imports: goods and services bought from overseas.
- What is the current balance? how to calculate.
difference between total exports and total imports
- total exports - total imports
- visible trade+ invisible trade
- What is current account deficit?
when the value of imports exceeds the value of exports.
- What is current account surplus?
when the value exports exceed the value of imports.
- What is a balance of trade/ visible balance? Invisible trade?
- visible balance:- the difference between visible exports and visible imports.
- Invisible trade:- involves the exchange of services.
- What is visible trade? Invisible trade?
i. trade in physical goods.
ii. involves in exchange in services.
- What is primary income?
money received from the loan of production factors abroad.
- What is secondary income?
government transfers to and from overseas agencies such as EU.
- What is exchange rate?
price of one currency in terms of another.
- How does exchange rates impact current account?
- Demand for exports as a result of changes in the prices.
- demand for the country’s goods, which influences demand for currency appreciating the value of the currency.
- What are the 5 reasons for deficit and surpluses?
- Quality of domestic goods.
- Quality of foreign goods.
- Price of domestic goods.
- Price of foreign goods.
- Exchange rates between countries.
- What are the 4 impacts of a current account deficit?
- leakages from the economy
- inflation
- low demand for exports.
- funding the deficit.