Balance of Payments

Question 1

current account

Answer 1

records transactions between countries involving goods, services, investment income etc

Question 2

Financial account

Answer 2

records transaction between countries involving change of ownership of assets

Question 3

FA balance

Answer 3

(Ex of domestic assets - Im of domestic assets) + (Ex of foreign assets - Im of foreign assets)

Question 4

Export of domestic asset

Answer 4

ownership leaving country
funds flowing into NZ
e.g tourist to NZ or china buying NZ farms

Question 5

Import of domestic asset

Answer 5

ownership coming back to NZ
funds flowing out of NZ
e.g. nz buying nz land from foreigner

Question 6

Balance of payments

Answer 6

transactions in goods and services , factors of production, buying and selling assets
CA+FA=0
BOP can’t be in deficit
if CA -, FA +