Balance Of Payments (Macro) Flashcards
What is the balance of payments?
A record of a country’s trade/transactions with the rest of the world
What is the main component of the balance of payments and what does it include?
The current account Trade in goods Trade in services Investment income Transfers
What is a surplus?
When the sum of exports of goods, services, investment income and transfers is greater than imports
What is a deficit?
When the sum of exports of goods, services, investment income and transfers is less than imports
What is the trade in goods?
Measures the net exports of visible goods
What is the trade in services?
Measures the net exports of invisible items (banking and insurance)
What is investment income?
It is primary and is UK owned assets overseas like a firm with company abroad
What are transfers?
It is secondary and are payments made (or received) usually by the government to or from other governments
