Is holds exclusive jurisdicion resident means those

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is holds exclusive jurisdicion – resident means those who have lived here for over 12 months with excepion to foreign diplomats, consulars and military and government personnel, as well as foreign students. Resident enterprises includes those engaged with producion of goods and services on commercial or equivalent basis Consists of current and inancial accounts as well as balancing item Current account – merchandise (trade) account, net services, net income and current transfers Income and current transfers: Payments to foreign holders of country’s investments and payments received from investments abroad as well as foreign transfers such as foreign aid and remitances Financial (capital) account: records transacions in inancial instruments and central bank reserves Balancing item: errors and omissions to balance the balance of payments, surplus in one account must be ofset by a deicit in the other, it has an account idenity, errors and omissions in compilaion, pracical approximaion to principles notes on speciic items: Trade account surplus: 1.06billion Net services surplus: 376million Net income and current transfers deicit: 11.2billion Current account deicit: 9.7billion Financial account surplus: 10.7billion: operaions of general government, RBA and private sectors direct and porfolio investment operaions Covers claims on or liabiliies to nonresidents, speciically with regard to inancial assets – includes Distributing prohibited | Downloaded by K C ([email protected]) lOMoARcPSD|2330446
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direct and porfolio investment and reserve assets, bank deposits, securiies, government bonds, debt etc. 4. The BoP and Internaional Finance Demand for FX is derived demand – derived from demand for goods, services and assets denominated in that country. By deiniion the demand for Australian currency is equal to the supply of foreign currencies. In general, the demand for a foreign currency is idenical to the supply of the domesic currency. Transacions involving trade and capital lows (recorded in BoP) give rise to demand and supply. Relaionship between the two is obvious, each transacion on the FX market gives rise to an entry into the BoP, the BoP is essenially a recording of the demand and supply of domesic currency Factors that afect current account: economic growth (faster growing countries purchase imports, slower growing do not), exchange rate (can buy more imports, exports more expensive), inlaion (inlaion erodes compeiive posiion of country) and trade restricions (tarifs and quotas – reduce imports, other countries may retaliate – trade war, we are moving towards free trade) Factors that afect inancial account: Taxes (dividend and capital gains), capital controls (restricions on capital ouflow) and expected percentage change in exchange rate (real rate of return) Changes in the supply and demand of FOREX are relieved by a change in the exchange rate. Thus, there need never be an imbalance in the balance of payments in a loaing exchange system More generally, a balance of payments deicit (surplus) arises whenever there is excess demand for (supply of) foreign currency on the private FOREX at the oicial ixed exchange rate. To saisfy the
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