What is the Balance of Payment Flashcards
(19 cards)
What is balance of payments?
Balance of payments- record of all transactions related to international trade
What is the current account?
Current account- part of the balance of payments where all exports and imports are recorded
What are exports?
Exports- The sale of goods and services to another country
What are imports?
Imports- The purchasing of goods and services from another country
What is capital and financial account?
Capital and financial account- record flows of money into and out of a country resulting from transactions relating to savings, investments and speculation.
What is the current balance?
Current balance- difference between total exports and total imports
What is the current account deficit?
Current account deficit- when value of imports exceeds the value of exports
What is the current account surplus?
Current account surplus- when value of exports exceeds value of imports
What is the balance of trade/visible balance?
Balance of trade/ visible balance- The difference between exports and imports of physical goods.
What is invisible trade?
Invisible trade- Trade in services
What is visible trade?
Visible trade- Trade in physical goods
What is primary income?
Primary income- Money received from loan of production factors abroad
What is secondary income?
Secondary income- Government transfers to and from overseas agencies such as the EU
What are exchange rates?
Price of one currency in terms of another.
The balance on the current account may influence the exchange rate itself.
Eg: If operating a surplus on current account due to rising exports, demand for that currency will rise which will drive up the exchange rate.
What is a surplus?
A surplus = a net INFLOW of income
What is a deficit?
A deficit = a net OUTFLOW of income
