Balance of Payments Flashcards
What does the Current Account measure?
CA= ???
CA=EX-IM
The current account is the difference between exports of good and services and imports of goods and services.
How can a country have a current account deficit?
By borrowing abroad
Definition of national saving.
In a closed economy, what is it equal to?
Sainv is the portion of output that is not devoted to household consumption C or government purchases G. In a closed economy, Saving equals investment.
Current Account in terms of output and spending?
CA= Y - (C + I + G)
What is the balance of payments?
Balance of payments keeps track of all payments to and receipts from foreigners
When an American company buys a French factory, the transaction enters the US balance of payments as a debit or as a credit?
As a debit
US sale of assets to foreigners is a debit or a credit on the US financial account?
A credit
