E333_ch12_balanceofpayments

E333_ch12_balanceofpayments - THE BALANCE OF PAYMENTS...

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Unformatted text preview: THE BALANCE OF PAYMENTS Chapter 12 The Balance of Payments The balance of payments : records of a countrys trade in goods, services, and financial assets with the rest of the world. Debit : what we receive Any imports (losing foreign exchange) Debits recorded as a negative value Credit : what we give back in return Any exports (earning foreign exchange) Credits recorded as a positive value The rule of double-entry bookkeeping 2 Components of the BOP Current Account Capital Account Financial Account 3 Current Account Current Account (CA): the record of a countrys income and expenditure (also called net exports ) Merchandise trade: tangible commodities Services: trade in the services of the factors of production (includes tourism, royalties, transport cost, insurance premiums) Investment income: payment for the services of physical capital (return on 4 Current Account: Credit (+) and Debit (-) Items 5 Credit Items (+) Debit Items (-) Current Account: Credit (+) and Debit (-) Items 6 Credit Items (+) Debit Items (-) Merchandise Trade Services Investment Income Unilateral Transfer Current Account: Credit (+) and Debit (-) Items 7 Credit Items (+) Debit Items (-) Merchandise Trade Export of goods. Import of goods. Services Investment Income Unilateral Transfer Current Account: Credit (+) and Debit (-) Items 8 Credit Items (+) Debit Items (-) Merchandise Trade Export of goods. Import of goods. Services Export of services. Import of services. Investment Income Unilateral Transfer Current Account: Credit (+) and Debit (-) Items 9 Credit Items (+) Debit Items (-) Merchandise Trade Export of goods. Import of goods. Services Export of services. Import of services. Investment Income Income earned by US residents on their previous investments abroad. Income paid to foreign residents on their previous investments in the US. Unilateral Transfer Current Account: Credit (+) and Debit (-) Items 10 Credit Items (+) Debit Items (-) Merchandise Trade Export of goods. Import of goods. Services Export of services. Import of services. Investment Income Income earned by US residents on their previous investments abroad. Income paid to foreign residents on their previous investments in the US. Unilateral Transfer Aid, gift, pension payments, etc. received by US government or residents from foreigners. Aid, gift, pension payments, etc. paid to foreign governments or individuals. Current Account: Credit (+) and Debit (-) Items 11 Credit Items (+) Debit Items (-) Merchandise Trade Export of goods. Import of goods. Services Export of services. Import of services. Investment Income Income earned by US residents on their previous investments abroad....
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E333_ch12_balanceofpayments - THE BALANCE OF PAYMENTS...

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