Balance of Payments Flashcards
1
Q
Investment income
A
any rent or profit earnt on investment abroad
2
Q
Current transfers
A
when money is transferred abroad without getting any goods or services back in exchange
(usually remittances)
3
Q
Factors affecting the current account
A
- exchange rates
- relative inflation
- costs
- quality
- income
4
Q
Exchange rates
A
pound appreciates, imports cheap and exports expensive, less exports, negative on current account
5
Q
Relative inflation
A
higher inflation rate, less exports, less exports, negative on current account
6
Q
Costs
A
higher costs, higher prices, less exports, negative on current account
7
Q
Quality
A
high quality, more exports, positive on current account
8
Q
Income
A
higher incomes, increase import expenditure (more normal goods), negative on current account
