Wednesday, August 24, 2016

165. Balance of payments

Balance of payments consist (amongst other things) of a CURRENT ACCOUNT and a FINANCIAL ACCOUNT. The current account reflects the imported and exported goods and services - the purely financial transactions are recorded in the financial account. The overall balance of payments position is reflected in the "Change in gold and foreign reserves" section of the account.

It must be noted that these accounts record only the financial transaction and not the economic values that change hands during the transaction.

The balance of payments is one determinant of the level of economic activity in a country...(to be continued)

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