MACRO 3 - Dom Flashcards
How do you get a balanced current account?
Imports need to equal exports
Name the 3 sections of the Balance of Payments
Current, financial and capital account
Definition for balance of payments
A record of a countrys trade/transactions with the rest of the world
4 factors of current account
Investment income
Transfers
Trade in goods
Trade in services
What goods does trade in goods measure the net exports of?
Visible
Name ways to have a large deficit on the trade in goods component of the current a/c
Due to
Increase in demand for consumer goods
Decline in the uk manufacturing sector
Lower production of primary materials such as gas and oil
Strong currency?
Makes imports of goods more affordable and exports less attractive to foreign buyers
Spiced?
Strong Pound Imports Cheap Exports Dear
Trade in services measure the net exports of…
Invisible items like banking insurance and tourism
Investment income
Primary income is generated by uk owned overseas assets
Transfers
Secondary payments made or received usually by the government with nothing exchanged in return
4 reason for deficit on the current a/c
High prosperity to consume imported good
Uk firms become less competitive in the manufacture of goods
Exchange rate is too strong
Unbalanced economy
4 ways to balance the current a/c
Controlling consumer spending will reduce the demand for imports
Investing in the supply side of the economy-improve productivity long term
Depreciation of exchange rate
Improve overall macroeconomic conditions in the uk
Factors influencing a country’s current a/c balance
Productivity
Inflation
Exchange rate
Economic activity in other countries
These are
Shit
