2 - Measures Of Performance - Balance Of Payments Flashcards
(7 cards)
1
Q
What is the balance of payments?
A
A record of all the flows of money between the residents of one country and the rest of the world
2
Q
Current account on balance of payments
A
Section of the BofP that records:
- international trade in goods/services
- primary and secondary incomes
3
Q
Balance of trade in goods and services
A
Value of exports - value of imports
4
Q
What does the current account record?
A
The exports and imports for these categories:
- trade in goods
- trade in services
- primary income
- secondary income
5
Q
Current account deficit
A
- suggests lack of international competitiveness
- X<M
- depreciation in currency
- inflationary pressures
- foreigners may own more UK assets
6
Q
Cyclical causes of current account deficit
A
- overvalued ER
- boom in domestic demand
- recession in key export industries
- slump in global prices of exports
- increased demand for imported tech
- increase in global energy prices (for importer)
7
Q
Structural causes of current account deficit
A
- under-investment
- low productivity
- persistently high inflation
- not enough R+D and innovation
- low cost competition
- increase global energy prices (for exporter)
