balance of payments

Question 1

Define balance of payments

Answer 1

account record for all transanctions completed with one country and the rest of the world, this includes exports and imports.

Question 2

What are the 3 sections that consists part of BOP

Answer 2

1. Current account
2. Financial accounts
3. Capital accounts

Question 3

What does current account consists of

Answer 3

Trade in goods

Trade in services

Primary income

Secondary income

Question 4

What is primary income

Answer 4

Investment income generated from investment from abroad, includes profits.

Question 5

What is secondary income

Answer 5

gifts between residents of different countries.

donations to charities abroad and overseas aid.

Question 6

whats easterlin paradox

Answer 6

The Easterlin Paradox is the observation that, despite increases in income, there may not be a corresponding increase in happiness or life satisfaction

Question 7

What are 2 evaluation points for how happiness is impacted due to a fall in real incomes.

also record low unemployment

Answer 7

other factors affect happiness besides real income eg. leisure time. (2)

record low unemployment = likely to lead to rising real incomes in future so consumer confidence increases so consumers more happy. (2)