Current Account of Balance of Payments.pptx

Economics

1. CURRENT ACCOUNT OF BALANCE OF PAYMENTS By: Lusi Martha

2. The Meaning of Balance of Payments The balance of payments is a record of all economic transactions between the residents of a country and all other countries in a particular period 02 These transactions are made by individuals, firms and the government Money coming into the country (export) is recorded as credit items and money leaving the country (import) as debit items

3. To know the economic condition of a country To know the steps that must be taken in the field of economic transactions To know domestic economic problems To assess the ability to meet foreign debts 03 The Functions of Balance of Payments

4. 01. a record of the income received and expenditure made by a country in its dealings with other countries. 03 Component Balance of Payments Current Account Capital Account Monetary Account balance sheet/records containing transactions of capital inflow and capital outflow from a country, ex: investment, debt contains records of changes in monetary transactions and records changes in foreign exchange reserves foreign exchange reserves: reserves in other currencies 02. 03.

5. The value of exported goods and the value of imported goods. Including cars, food and machinery Balance of Trade= Export - Import The Meaning of Current Account : a record of the income received and expenditure made by a country in its dealings with other countries. It has several components: 01. 04 Trade in goods (balance of trade) 02. Trade in services (balance of services) 03. Primary Income The value of exported services and the value of imported services. Including banking, tourism income earned by people working in different countries and investment income which comes into and goes out of the country. 04. Secondary Income This is transfers of money, which is sent out of the country or come into the country, not in return for anything else

6. If revenue from the export of goods/services exceeds the expenditure from import of goods, the country is said to have a trade in goods/services deficit. In contrast, a trade in goods/services surplus occurs when export revenue exceeds import expenditure Deficit & Surplus in Trade/Services 05

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8. Deficit & Surplus UNIVERSITAS FRADEL & SPIES

9. Deficit & Surplus UNIVERSITAS FRADEL & SPIES

10. There are a number of factors that influence the value of a country’s exports and imports. These include Changes in exports and imports The country’s inflation rate Productivity Marketing Quality 06 Domestic GDP Foreign GDP

11. Policies to correct a current deficit

12. Policies to correct a current account surplus

13. Thank You