Balance of Payments

• What is the Balance of Payments?

  The record of all financial transactions between one country and the rest of the world.
• What is the current account made up of?

  • Trade of goods
  • Trade of services
  • Income flows
  • Transfers
• What is an import?

  Products brought into a country from another for sale or use.
• What is an export?

  A product that is sold from one country to another.
• What does Income Flows mean?

  Earnings made by a country through wages, interest or investments.
• What does ‘Transfers‘ mean in terms of BOP? Give an example.

  Movement of money or products without a payment:

  Foreign Aid
• What does a current account deficit mean?

  A current account deficit means that a country's imports of goods, services, and investments is higher than it’s exports.
• What does a current account surplus mean?

  A current account surplus means that a country’s exports of goods, services, and investments is higher than it’s imports.