Ch 5 Global Trade [AP & Reg]

4thebalanceonthecapitalandfinancialaccountisasurplusde

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Unformatted text preview: es [balance on goods and services] Services • 3. Net investment income [interest, dividend, & profit income] Net • 4. Net transfers [foreign aid, pensions, money sent back home, etc.] Net • • • • • • • The Capital and Financial Account includes three items: Capital three 1. Balance on capital account [net “debt forgiveness”] Balance “debt 2. Foreign purchases of U.S. assets [real or financial] in the U.S. Foreign 3. U.S. purchases of foreign assets [real or financial] abroad. U.S. The difference between these two accounts is the “balance of payments.” these “balance They should balance. should If not, official reserves will be used to balance them. official • • [a + here means we will export a stock of foreign money ($’s will enter the U.S.)] export [a – here means we will import a stock of foreign money ($’s will exit the U.S.)] import • [If you bought a parachute from a factory in Germany–Current Account] [If you bought a parachute factory in Germany – capital...
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This note was uploaded on 07/20/2012 for the course ECON 2106 at GCSU.

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