Balance of Payments - Current Account

Question 1

What is the balance of payments

Answer 1

The balance of payments is a record of all financial dealings over a period of time
between economic agents of one country and all other countries .

Question 2

What are the 4 components that make up the current account
(give examples where necessary)

Answer 2

1.Trade in Goods

2.Trade in services

3. Income
   -wages, salaries, dividends, interest payments
4. Current transfers
   -foreign aid, remittances

Question 3

Define remittances

Answer 3

Remittances are transfers of money by foreign workers to individuals (usually family members) in their home country.

Question 4

What is the condition for a current account deficit

Answer 4

Money flowing out of the country>Money flowing into thee country