Balance of Payments Flashcards
What is the balance of payments?
Record of all financial dealing between economic agents of one country and every other country over a certain period of time
What is the current account?
Balance of trade (imports & exports), income and TRANSFER OF MONEY
Where does money flow for any export?
Into the country
Where does money flow for any imports?
Out of the country
What are net transfers?
Americans giving money away to rest of the world (family or foreign aid…)
What is an income payment?
Foreigner owning a US company getting money from US economy - outflow of money
What is an income receipt?
US citizens getting money from their foreign ownership of companies
What is the capital account?
CHANGE IN ASSETS (privately owned or government owned)
What is a change in foreign asset in US?
Foreigner buying a privately owned US asset
What is a change in foreign reserves?
Foreigner buying something from US government (bond…)
What is a change in US assets abroad?
Buying a privately owned asset from a different country
What is a change in US reserves?
US buying assets from a foreign government
What is the current account (change in flows of money) split into?
Trade in goods
Trade in services
What is a visible item?
A “good”
What is an invisible item?
A “service” or primary/secondary income
