2.1.4 - Balance of Payments

Question 1

Current Account:

Answer 1

1. trade in goods
2. trade in services
   = trade balance - exports and imports
3. investment income - eg remittances
4. transfers - eg EU fees, Aid
   = income balance

Question 2

Financial Account:

Answer 2

• 1. Portfolio investment – bonds, shares, derivatives
• 2. FDI
• 3. Reserves – currency/gold

Question 3

Capital Account:

Answer 3

• Debt forgiveness - (negative - in the balance) as you don’t get money back that you are owed
• inheritance taxes
• debt duties
• sales of tangible assets – produced assets
• sales of intangible assets
• transfers of financial assets by migrants

Question 4

Net errors + Omissions (balancing tool)

Answer 4

overall there must be a balance = account sums to 0