Balance Of Payment Flashcards
What is Balance Of Payment?
A record of all economic transactions between a country and the rest of the world, during a time period.
What is Current Account?
A record of the economy’s international trade in currently produced goods and services, net foreign income and net foreign transfers.
Capital Account
A record of transfers of assets between countries, foreign investments and changes in currency.
Current Account
Record of the economy’s international trade in currently produced goods and services, net foreign income and net foreign transfers.
Net Goods
Money received from exports of goods minus the money spent on the imports of goods.
Net Services
Money received from services exports minus money spent on services imports.
Balance Of Trade
Addition of net goods and net services.
Net Primary Income
The income paid to and received from foreigners in the form of interest payments on loans, profits on investments, dividends from shares, rent on property and wages.
Net secondary income
Refers to as ‘transfers’ in the form of gifts, taxes, pensions and foreign aid.
Balance on Capital account
Capital transfers that are done by foreigners immigrating into the country or citizens migrating to
Net Direct Investment
Money involved when foreigners individuals or firms purchase assets or take ownership of a company in the domestic country or vise versa.
Net Portfolio Investment
Includes the value of transactions such as foreign purchases and sales of real estate, shares and bonds.
Foreign Debt
the total of all debt owed by a country’s households, firms and the government to the rest of the world.
National debt
National debt is the total amount of money a government owes to both domestic and foreign lenders, as a result of previous borrowing.
