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Unformatted text preview: inancial assets).
– Notice that the two transactions offset each other.
Theoretically, the balance payments should always
equal IN OUT • Lucky for you, in AP Macroeconomics we
only worry about the 1st half of the
transaction. We simplify and see the
export of farm equipment as a credit
(inflow of $) to the current account.
• Why then, did I mention double entry
– To help you understand that the current
account and capital/financial account
are intrinsically linked together and
help balance each other?
– Yes, that’s it! • Balance of Trade or Net Exports – Exports of Goods/Services – Import of Goods/Services
– Exports create a credit to the balance of payments
– Imports create a debit to the balance of payments
debit • Net Investment Income [Interest, dividend, & profit income]
– Interest, dividend, and profit income earned by America...
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This note was uploaded on 07/20/2012 for the course ECON 2106 at GCSU.