2.1.4 BALANCE OF PAYMENTS

Question 1

What is the balance of payments?

how does this link to imports and exports

Answer 1

• A financial record of all the trade between one country and the rest of the world?
• imports currency flowing into the UK to overseas.
• exports currency flowing into the UK.

Question 2

What is the structure of the balance of payments.

what is in these parts

Answer 2

Current account and capital account+financial accounts

(under the current account there is:
Net trade of goods (value exports - value imports)
Net trade of services (value exports - value imports)
Investment income (overseas investment)
Net current transfers ( eu membership fees)

Capital account and financial accounts

1-Real foreign direct investment
2- portfolio investment
3- hot money
4- government official financing.