Balance of payments Flashcards
1
Q
What is the balance of payments?
A
A country’s balance of payments account records all the flows of money between the residents of that country and the rest of the world
2
Q
What is the current account?
A
- Balance of trade (x-m) = trade in goods and services
- Net primary income = profit, income, interest and dividends
- Net secondary income = foreign aid, contributions to international institutions, grants and gifts
3
Q
What is the capital account?
A
- Sale/transfer of IP such as patents
- Debt forgiveness
- Capital transfer of ownership
4
Q
What is the financial account?
A
- Short term capital
- Portfolio investment = gov bonds and company shares
- Long term capital FDI
- Foreign reserves
