Balance of payments 4.1

Question 1

Balance of payments

Answer 1

The balance of payments records a country’s financial transactions with the rest of the world
Made of Current & Capital Account

Question 2

Current Account

Answer 2

records trade in goods and services

Question 3

Capital & Financial Account

Answer 3

records short and long term capital movements.

Question 4

Causes of Current Account Surpluses and Deficits

Answer 4

Exchange rates

Endowment of natural resources e.g. Norway large surplus

Inflation

Productivity - Germany has 35% more productivity per hour worked than the UK

Question 5

Measures to Reduce a Current Account Deficit

Answer 5

Currency depreciation

Supply Side Policies