BoP Flashcards
Define balance of payments
Measure of value of all international transactions
Which components make up balance of payments?
Current account
Financial account
Capital account
What components make up current account?
Trade in goods
Trade in services
Income - flow of income
Transfers - govt paying fees/ aid etc…
What components make up current account?
Trade in goods
Trade in services
Income - flow of income
Transfers - govt paying fees/ aid etc…
What is a current account deficit?
When overall more money is leaving than entering the country than leaving
What is a current account surplus?
When overall less money is entering the country than leaving
What is known as trade balance?
Trade in goods and trade in services
What components make up capital account?
Debt forgiveness
Inheritance taxes
Death duties
Sales of tangible assets
Sales of intangible assets
Transfer of financial assets by migrants
What components make up financial account?
Portfolio investment transactions
Foreign direct investment
Reserves
What makes up portfolio investment transactions?
Bonds
Shares
Derivatives
What makes up reserves?
Currency
Gold
