306_Chapter16 - Payments among Nations The Balance of...

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Payments among Nations
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The Balance of Payments n Credit (+) – an item for which foreigners  must pay Canada n Debit (-) – an item for which Canada must  pay  n Double entry book-keeping- each  transaction generates a debit and a credit  entry n The balance of payments always balances
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Current account n Exports and imports of goods Which one is a credit? Debit? n Exports and imports of services Same question What do services include?  Tourism, education, insurance, transportation n Trade balance
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Current Account n Income receipts and payments Payments to holders of financial assets –  interest, dividends; payments to temp foreign  workers n Gifts (unilateral transfers) Government aid, transfers of money by  immigrants back home, charity
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Capital Account n Debit – a Canadian resident increases  his/her holdings of foreign financial assets n Credit – a foreign resident buys Canadian 
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306_Chapter16 - Payments among Nations The Balance of...

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