National Balance Sheet

Question 1

What is the national balance sheet?

Answer 1

Lists all the assets and liabilities (claims held and claims due) on a particular date for an economy

Question 2

What represents the real wealth of a nation?

Answer 2

Physical assets e.g. Land, buildings, roads and machinery

Question 3

Why do physical (or capital) assets play a major role in the generation of income within an economy?

Answer 3

By assisting in the production of goods and services

Question 4

What is simultaneous about the balance sheet…

Answer 4

A financial claim is simultaneously an asset to one economic unit and a liability to another - linking the 2 economic units

Question 5

What does the balance sheet list?

Answer 5

Snapshot of…

Assets e.g. Land/buildings etc

Sources of finance e.g. Equity or shareholder funds, amount of ,only shareholders have placed in the company

Total values of assets and sources of finance (I.e. Liabilities) must EQUAL

Question 6

The national balance sheet is split into…

Answer 6

Public sector (tax and national debt)

Industrial/commercial sector (private corps producing gds and services)

Personal sector (bulk net worth)

Question 7

How do banks play a part in the national balance sheet?

Answer 7

By acting as FIs.

Financial transformation
Minimise risk of loss I.e. Diversifying
Balancing claims created with individuals/companies holding matching asset/liability