T6 BoP Flashcards

1
Q

What is the balance of trade

A

The measure of net exports of goods and services

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2
Q

Is the balance of trade an amount or a value

A

Value

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3
Q

What are the main sections of the balance of payments current account(3)

A

Balance of trade
Primary icnome - netflows of FDI that generate profit
Secondary income - donations, etc from other countries

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4
Q

What affects does the BoP have on AD

A

When in a deficit AD will fall

When in a surplus AD will rise

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5
Q

What is a balance of trade deficit

A

Where the value of imports is greater than ecports

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6
Q

What are the affects of a trade deficit(3)

A

Falling comparative advantage
Over/under valued exchange rates -
Withdrawals fromthe economy

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7
Q

What is significant about a trade surplus(4)

A
Increased GDP
Could cause DP inflation 
Increase in foreign exchange reserves
 Changes the ER
Possible increase in trade protectionism
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8
Q

What influences the current accoutn(4)

A
Consumer import spending 
Capital flows from abroad 
Relative eco growth 
Saving rates 
Comp/Productivity 
Inflation rates 
Interest rates and the exchange rate
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9
Q

Effects of indward investment(4)

A
increase in GDP 
Jobs 
Inc in productive capabilites 
Access to new tech 
Increase in domestic production 
A better capital accoutn - increased primary income on the current account
Makes up for the lack of domestic development
SUPPLY SIDE GROWTH
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10
Q

What can affect FDI flows(4)

A
The stage the economy is in on the economic cycle
Economic expectations 
Legislations
Taxes
Interest Rates 
Incentives
Domestic wages
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11
Q

What are some supplyside polices to reduce a deficit(4)

A

Anything that lowers COP, and increases international comp and compartive advantage

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12
Q

Demand side policies to deal with a deficit

A
Inc gov spending 
Lower interest rates
 Lower taxes 
Higher tarrifs
 Changes of tarrifs and quotas 
A lower exchange rate 
Lower availability
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13
Q

Dangers of a persistent defiit

A
Lower Ad, Lower growth 
Dec standards of living 
Loss of domestic jobs 
Currency weakness 
Decreased domestic competitivness 
Loss of investor confidence
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14
Q

What are expenditure reducing policies

A

Policies aimed to reduce AD and real incomes to lower the demand for imports

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15
Q

What are expenditure switching policies

A

Policies aimed to switch spending on imports to the local economy and boost exports

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16
Q

what are the 3 accounts of the bop

A

current account
financial accoutn
capital account

17
Q

sections of current accoutn bop

A

trade in goods
trade in services
income
tranfsers

18
Q

what does incoem flows mean in current accoutn

A

incoem brought into the UK by workers say

19
Q

what are transfers in current accoutn

A

thigns liek aid, gove payments and shit

20
Q

what are teh two other parts of bop other than current account

A

financial account
capital accoutn

21
Q

what is the capital account

A

measures the tansfers of assets and laibilities

22
Q

example fo shit that may be on the capital account

A

japaense firms buildign a facotru in uk
japanese banker buying gov securities
international inheritance tax
sales of shit like copy rights and stuff abroad

23
Q

what is the financial accounts

A

buying and selling of financial assets
FDI
Reserves

24
Q

exampels of buyign and sellign fo fianncial assets in financial account

A

bonds
shares
dervivatives

25
What are reserves in financial account
Currency reserves Gold reserrves
26
how can fdi be attarcted
susbdiised for say relocation flexible labour markets eduacted workforc lower levels of tax reveneue