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4.1.7: Balance of Payments (2) Advanced
Terms in this set (16)
Includes effects of debt forgiveness, sale/transfer of patents, copyrights, franchises, leases and other transferable contracts across borders.
Nations that have a balance of payments surplus on the current account.
Measures the difference between money and credit going in and out of an economy (through exports, imports and income paid on assets both home and abroad).
Nations that have a persistent balance of payments deficit on the current account.
Expenditure- reducing policies
Policies designed to lower real incomes and aggregate demand and thereby cut demand for imports
Expenditure- switching policies
Policies designed to change the relative prices of exports and imports.
Sales from selling goods and services overseas.
Debt is owed by governments, households and businesses in a country to external (overseas) creditors.
The value of exports (X) minus value of imports (M).
Transactions that result in a change of ownership of financial assets and liabilities between residents of different countries - includes net flows of money into equities, bonds, property.
Money that flows freely and quickly around the world looking to earn the best rate of return
When people / businesses from one country buy shares or other securities such as bonds in other nations
Net flow of profits, interest and dividends from investments in other countries and net remittance flows from migrant workers.
When migrants send home part of their earnings in the form of either cash or goods to support their families
Net flow of overseas aid / debt relief, military grants and so on.
Structural Trade Deficit
A trade deficit that arises due to supply-side weaknesses rather than a change in GDP or currency
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