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level: Measuring the Balance of Payments

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level questions: Measuring the Balance of Payments

QuestionAnswer
What does the Balance of Payments record?-The Flow of Money OUT of a Nation [Imported Goods eg] -The Flow of Money INTO a Nation [Exported Goods eg]] -It is also the Value of the Exports and Imports, not the Volume. Prices Changing can change the Balance of Payments
What are the 4 Sections to the Current Account? [Main Part of the Balance of Payments]1. Trade in Goods - The Visible Trade. [Cars, Computers..] 2. Trade in Services - The Invisible Trade [Tourism, Insurance..] 3. International Flows of Income made in Salaries, Interest, Profit and Dividend. [Interest on an Account held in a Foreign Nation] 4. Transfer of Money from 1 Person, or Government, to Another [Foreign Aid, Remittances]
How can a Balance of Payments be Unbalanced?-This is when the Flows of Money INTO isn't Equal to the Outflow -Money Inflow > means there is a Surplus, while Money Outflow > means there is a Deficit
State the UK's Balance of Payments-Britain has a Deficit overall to its Balance of Payments -A Surplus in the Invisible Trade, but a Greater Deficit in the Visible Trade.