aos3 dpoint 2 Flashcards
(27 cards)
balance of payments
an annual statistical record of the money value of different types of financial transactions between aus and the rest of the world. recorded in credit and debit
credit
money recived by aus from overseas
debit
money paid by aus to overseas
the balance on current account
- Net goods (credit for goods exported MINUS debit for goods imported)
- Net services (credit for services exported MINUS debits for services imported)
- Net primary incomes (credits for primary incomes received MINUS debits for primary incomes paid)
- Net secondary incomes (credits for secondary incomes received MINUS debits for secondary incomes paid)
ADD ALL TOGETHER
balance surplus
if credits outweigh debits
balance deficit
debits outweigh credits
balance on CAFA (capital and financial account)
- balance of capital
a. net capital transfers (capital transfer credits received MINUS capital transfer debits paid)(net inflow of funds to aus by permanent migrants)
plus
b. net acquisition of non-produced financial assets (credits received minute debits paid) (trademarks, copywrite) - balance on financial account
a. net investment (net direct(purchase or expansion of companies and assets in AUS by foreigners), net portfolio (transactions into and out of aus involving shares, debt) invest credit minus debits
b. net reserve assets (by the RBA, (gold)) - credit minus debit
Net goods/examples
Exports and imports of goods (tangable iteams)
oil, electronic equipment and machinery, wool, minerals and manufactured items
Net services/examples
Exports and imports of services (intangable)
tourism, education, transportation, construction, financial, royalties, licence fees, insurance
Net primary incomes/examples
Receipts and payments of income on foreign and Australian owned assets
wages, salaries, interest, dividends, rent and profits
Net secondary incomes/examples
Transfer of funds without any current or future obligation
non-life insurance transfers such as pensions gifts, taxes and some foreign food aid donated by our residents
Trade balance
The value of goods and services that Australian residents export less those that they import.
Primary income balance
The income that Australian residents earn from, less that they pay to, the rest of the world from working (e.g. wages) and from financial investments (e.g. dividends).
Secondary income balance
Consists of two parts:
The income that Australian residents earn from, less that they pay to, the rest of the world from the government (e.g. tax payments and refunds).
Current transfers: transactions between Australian residents and the rest of the world where one party provides something to be consumed by another party without receiving anything in return (e.g. emergency food aid).
CAFA
The capital account component records two main types of transactions involving capital.
Thefirst is ‘capital transfers’, where one party has transferred ownership of something to another party without receiving anything in return e.g. a foreign aid project to build roads, or forgiveness of debt.
The second type of transaction involves ‘non-financial, non-produced assets’; this type of asset includes intangible assets (e.g. brand names) as well as rights to use land or water (e.g. for mining or fishing).
CAFA capital. Capital transfers
-Transactions where one party has transferred ownership of something to another party without receiving anything specific in return. For example: forgiveness of debt (so that the borrower no longer has to pay back what they borrowed) conditional grants for capital projects (e.g. foreign aid to build roads, dams and schools)
-transfer of assets between residents and non-residents.
CAFA capital. Acquisition/disposal of non-produced, non-financial assets
Transactions that involve intangible assets (e.g. brand names, copyrights and trademarks) and rights to use land or water (e.g. for mining or fishing).
CAFA finacial. direct investment
where there is a change in a controlling interest in an asset. (e.g. purchase of machinery, buildings and factories) where the investor has significant – 10percent or more – voting power in the business (i.e. through ownership of ordinary shares or voting stock).
CAFA finacial. Portfolio investment
The purchase of equity or debt (shares or bonds) in a business. In contrast to direct investment, portfolio investment occurs when the investor does not have an influence in the operation of the business.
(smaller transactions)
CAFA financial. Financial derivative
changes in ownership of financial contracts ‘derivaties’, just another form of assets/Iiability
CAFA financial. Reserve assets
changes in assets/liabilities between central banks
CAFA financial. Other investment
Transactions that do not fit into one of the other categories. One example is ‘trade credit’ where an importer purchases goods from overseas and does not pay for the goods until they are received.
Net errors and omissions
reflects inaccuracies in finacial account calculations and estimations. When this category is taken into account, the positive balance on Australia’s capital and financial account will exactly offset the negative balance on current account (the CAD).
CURRENT ACCOUNT
is used to describe the current account because the goods, services and income being traded in will be consumed or received in the current period (no future obligations)
