Ch. 26

• What does the balance of payments show?

  Transactions between residents and the world
• What does the current account of the balance of payments identify?

  Transactions in goods, services, and income payments
• What types of transactions does the financial account of the balance of payments identify?

  Transactions in financial assets
• What does the capital account of the balance of payments identify?

  Transactions in physical capital
• What are the three main accounts in the balance of payments?

  • Current account
  • Financial account
  • Capital account