week 1 BOP

Question 1

what is on the current account?

Answer 1

goods (import/export)
services (transport/tourism)
primary income (wages/interests/dividents)
secondary income

Question 2

what is on the financial account?

Answer 2

assets & liabilities

Question 3

define assets

Answer 3

person or entity who is owed money

Question 4

define liabilities

Answer 4

something you have to pay

Question 5

what is the balance between assets and liabilities and what does it mean

Answer 5

balance = assets - liabilities,
positive –> net lender
negative –> net borrower

Question 6

what kinds of assets and liabilities are there? (3)

Answer 6

1. FDI (Foreign Direct Investment): when a person takes a certain amount of control over a foreign company
2. FPI (Foreign Portfolio Investment): buying stocks & bonds to hold as savings
3. OI (Other Investments): equity; bonds

Question 7

describe the most important aspects of the article of Linsi

Answer 7

• quality of economic measurement has two dimensions; accuracy (measurement errors) and concept-measurement gap (how does data corresponds to what it should measure).
• quality is deteriorating because countries measure the same things differently which will then create different outcomes on the BoP and thus a measurement difference