2.1.4

Question 1

Balance of payments

Answer 1

Record of all financial transactions made between consumers, firms and the government from one country with other countries
States how much is spent on imports, and what value of the exports is

Question 2

Exports

Answer 2

Goods and services sold to foreign countries, positive in the balance of payments because they are an inflow of money

Question 3

Imports

Answer 3

Goods and services bought from foreign countries, and they are negative on the balance of payments as they are an outflow of money

Question 4

What is the balance of payments made up of

Answer 4

• the current account
• the capital account
• the official financing account

Question 5

The current account on the balance of payments

Answer 5

Balance of trade in goods and services

Question 6

Current account surplus

Answer 6

Means there is a net inflow of money into the circular flow of income
The UK has a surplus with services but a deficit with goods

Question 7

Current account deficit

Answer 7

UK spends more on imports from foreign countries, than they earn from exports to foreign countries

Question 8

UK governments macro objectives

Answer 8

• full employment
• low,stable inflation
• a sustainable current account on the balance of payments
• sustainable economic growth