BALANCE of PAYMENTS
Pepa Azorín
Created on August 16, 2018
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Transcript
BALANCE OF PAYMENTS
Pepa Azorín Forte
It must always be in equilibrium
DEFINITION
Balance of payments ACCOUNT
The balance of payments account is a record of the value of all the transactions between the residents of one country and the residents of all other countries in the world over a given period of time.
INTERNATIONAL
CREDIT ITEM
TRANSACTIONS
DEBIT ITEM
Any transaction that leads to money entering the country from abroad is known as a credit item in the balance of payments and is given a positive value.
Any transaction that leads to money leaving the country to go abroad is known as a debit item in the balance of payments and is given a negative value.
The period of time is usually ONE YEAR
PERIOD OF TIME
although monthly balance of payments accounts is also produced
There are two main parts to the balance of payments account
MAIN PARTS
THE CURRENT ACCOUNT
THE CAPITAL ACCOUNT
The current account is a measureof the flow of funds from trade in goods and services, plus other income flows
THE CURRENT ACCOUNT
CAPITAL TRANSFERS
THE CAPITAL ACCOUNT
HAS
TWO
NON-FINANCIAL ASSETS
COMPONENTS