Calculating balance of payments Flashcards
1
Q
What does the capital account measure?
A
measures trasnsfers in assests and liabilities
2
Q
Capital/Financial account examples?
A
- Direct investment (building factories)
- Portfolio Investment (saving money in pension funds/investment trusts)
- overinvestment (e.g housing)
3
Q
If a country has a current acount surplus they will have ……. capital account ……..
A
If a country has a current acount surplus they will have equal capital account deficit
4
Q
How to calculate current account?
A
Balance of trades in Goods + balance of trades in services + Net primary income + Net income tranfers
5
Q
Overall balance of payments shoul equal…?
A
0
6
Q
Net money flows =
A
INFLOWS of money - OUTFLOWS of money
7
Q
What does net income reciepts mean?
A
primary income - current transfers is simply secondary income
