Balance of Payments

Question 1

Capital Account

Answer 1

A record of all the transfers of ownership of capital and other assets between countries.

The capital and financial accounts record transactions in income-producing assets.

Question 2

Capital Controls

Answer 2

Limits on the amount of money that can be brought into or out of a country; often used to reduce capital flight.

Question 3

Capital Flight

Answer 3

An outflow of funds from a country, often due to negative changes in the economic, political, or social conditions.

Question 4

Current Account

Answer 4

A record of transactions in exports, imports and income flows between one country and the rest of the world over a given period of time.

Question 5

Financial Account

Answer 5

Record of all financial transactions and direct investment between countries, and currency reserves held by central banks.

The capital and financial accounts record transactions in income-producing assets.

Question 6

Foreign Direct Investment FDI

Answer 6

The long-term investment by multinational corporations in a foreign country

Involves either setting up factories and expanding their operations in the new country, or the purchase of at least a 10% share of a foreign company.

Financial Account

Question 7

Intellectual Property

Answer 7

Ownership of an invention, innovation or manufacturing technique.

Capital Account

Question 8

Portfolio Investment

Answer 8

Purchase and sale of financial capital. This includes shares, bonds, derivatives, the trading of commodities and currencies.

Financial Account

Question 9

Remittances

Answer 9

Money sent back home from workers working abroad.

Current Account