aos3 dpoint 2 BOP Flashcards
(22 cards)
balance of payments
recorded in credit and debit
The balance of payments is the annual statistical record of Australia’s financial transactions with the rest of the world
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
Net goods/examples
Exports and imports of goods (tangible items)
oil, electronic equipment and machinery, wool, minerals and manufactured items
net goods = (credit for goods exported MINUS debit for goods imported)
Net services/examples
Exports and imports of services (intangable)
tourism, education, transportation, construction, financial, royalties, licence fees, insurance
(credit for services exported MINUS debits for services imported)
Net primary incomes/examples
Receipts and payments of income on foreign and Australian-owned assets
wages, salaries, interest, dividends, rent and profits
(credits for primary incomes received MINUS debits for primary incomes paid)
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
(credits for secondary incomes received MINUS debits for secondary incomes paid)
Trade balance
The value of goods and services that Australian residents export less those that they import.
CAFA capital. Capital transfers
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 finacial. direct investment
where there is a change in a controlling interest in an asset. 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
captures the net flow of money that results from austrlia interacfitvity with internation trade.
the goods, services and income being traded in will be consumed or received in the current period (no future obligations)
CAFA
records net changes in ownership of assets and liabilities
records credits and debits for capital/financial transactions (future obligations)
net
after deductions (credit after-debits)
stock
measurement at a point in time (e.g debt outstanding)
