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Flashcards in Measuring Macroeconomic Activity II (Balance of Payments) Deck (9)
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1

BoP

Balance of Payments

CA + KA = FA

2

The BoPs three sub-accounts

1. Current account ( CA )

2. Capital account ( KA )

3. Financial account ( FA )

3

Measuring the Current account ( CA )

1. Exports and import of goods and services

2. Primary income received and paid

3. Secondary income received and paid

CA = TB + BPI + BSI

4

Measuring the capital account ( KA )

1. Capital transfers received and granted

2. Acquisition and disposal of no produced nonfinancial assets

KA = met receipt of capital transfers
- net acquisition of nonproduced nonfinancial assets

5

Measuring the financial account ( FA )

1. Foreign direct investment

2. Portfolio investment

3. Other investment

4. Reserves

FA = net acquisition of foreign financial assets
- net incurrence of foreign financial liabilities

6

FA > 0 (CA + KA > 0)

Domestic economy is a net lender

7

FA < 0 (CA + KA < 0)

Domestic economy is a net borrower

8

Transaction leading to a payment from nonresident to resident

1. First recorded as a credit entry

2. That off sets a debit entry

9

Transaction leading to a payment from resident to nonresident

1. First recorded as a debit entry

2. That off sets a credit entry