4.6 - Balance of Payments Flashcards
1
Q
Define balance of payments
A
An account that records the inflow and outflow of funds to and from the domestic economy.
2
Q
List out the 4 sections of the balance of payments.
A
- Current account
- Capital account
- Financial account
- Balancing item
3
Q
Define current account
A
A record of the amount of inflows and outflows of funds from trade in:
- Goods and services
- Investment incomes
- Transfer payments
4
Q
Define capital account
A
The purchase and sale of intangible assets. Things such as patents, copyrights, brand names and franchises.
5
Q
Define financial account
A
Inflow and outflow of funds involving the purchase and sale of different types of assets:
- Direct investment
- Portfolio investment
- Reserve assets
