BOP Flashcards
(6 cards)
1
Q
Current account made of
A
- primary income
- secondary income
- imports
- exports
2
Q
Capital account made of
A
- Non-produced & non-financial g&s
- Conditional aid
- Debt forgiveness
3
Q
Financial Account made of
A
Investments
- FDI ( starting a new business or buying >10% ownership of a company)
- Portfolio Investment - buying shares, derivatives, bonds
- Other investments ( e.g. land, loans)
- Currency Reserves
4
Q
Net errors and omissions
A
An accounting standard that allows for discrepancies. Although it ensures the BOP balances, it is not why it balances.
5
Q
Reserve assets (financial account)
A
Foreign assets controlled by the RBA (e.g. gold reserves, foreign currency, held wit the IMF
6
Q
What causes the BOP to Balance
A
- Floating exchange rate
- double entry system
