{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Balance of Payments

Balance of Payments - 1 Balance of Payments a Know what...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
1. Balance of Payments a. Know what makes up the current account and capital account Current account: Exports - imports + net investment income (earned income on investments in this country - interest payments to foreigners on domestic investments) - debt service payments (interest in dividends on debt issued, i.e. interest you have to pay on the debt) + net remittances (people abroad sending income home) and transfers if it equals a positive number, then that "country has a current account surplus" if it equals a negative number, then that "country has a current account deficit" Capital account: Direct private investment (in the form of foreign direct investment - FDI) - when a multinational invest in your country and build stuff in your country, e.g. a US firm buying a building in a foreign country (multinationals building domestically) + foreign loans (foreign aid, loans from banks from private or public sources, e.g. Citibank or the World Bank) - increase in foreign assets of domestic banking system
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Ask a homework question - tutors are online