Balance Of Payments

Question 1

Four sections of current account?

Answer 1

Trade in goods - measures imports and exports of visible goods

Trade in services - measure imports and exports of services such as insurance or tourism

Investment income - covers flow of money in and out a country resulting from earlier investment

Transfers - movements of money of money between countries - eg families sending money back.

Question 2

Consequences of balance of payments defecit?

Answer 2

Borrow money to pay off the deficit they’ll encounter

Leads to domestic job losses