Balance of payments

Question 1

Show how to calculate the balance of trade and/ or current account

Answer 1

Balance of trade= value oof visible exports - value of visible imports

Question 2

Interpret, inflows and outflows of currency in terms of equilibrium

Answer 2

Equilibrium= inflows=outflows
Surplus = inflow is greater than outflow
Deficit = outflow is greater than inflow

Question 3

What are the reasons for a surplus in the balance of trade/ current account?

Answer 3

-competitive advantages, which park are in a country pub, provide a product at a lower average cost and provide a better quality product
-Economic policies, such as monetary and fiscal, encourage savings and investments that can increase productivity, and hence become more competitive on the international market
-Increase in global demand may have the effect of increasing the demand for exports from the country, experiencing a surplus

Question 4

what are the reasons for a deficit on the balance of trade or a current account?

Answer 4

-Competitive disadvantages, which me include higher production costs and lower product quality
- Economic policies, such as monetary and fiscal policies that tend to boost domestic demand
- Hi, domestic consumption may give rise to an increase in imports
- Dependence on imports of essential goods, such as philosophy with you to lack of natural resources