In this lesson, our instructor Jibin Park gives an introduction to balance of payments. He discusses the balance of payments account, sales factor and transfers, financial account, current account, loanable supplies, the loanable funds model, and global savings glut.
The Current Account equals the balance of payments on goods and services plus net international transfer payments and factor income
When a country imports more than it exports, it generally runs a trade deficit and so the current account is negative
When a country exports more than it imports, it generally runs a trade surplus and so the current account is positive
The financial account is the difference between a country’s sale of assets to foreigners and its purchases of assets from foreigners from a given period
Current Account = -(Financial Account), or Current Account + Financial Account = 0
When interest rates are high, capital inflows take place
When interest rates are low, capital outflows take place
The GNP does not include international factor income
GDP is the more accepted tool as the intent was to track production and not income
The US, despite low interest rates, takes in capital inflows and in a massive current account deficit, in part, because of a global savings glut
Balance of Payments
Lecture Slides are screen-captured images of important points in the lecture. Students can download and print out these lecture slide images to do practice problems as well as take notes while watching the lecture.
This book created a 5-step plan to help you study more effectively, use your preparation time wisely, and get your best score. This book includes two full-length practice exams modeled on the real test, all the terms and concepts you need to know to get your best score, and your choice of three customized study schedules.
This book includes an in-depth preparation for both AP economics exams. It features two full-length practice tests, one in Microeconomics and one in Macroeconomics, and all test questions answered and explained. It also features a detailed review of all test topics, which include: supply and demand, theory of consumer choice, economics in the public sector, costs, perfect and imperfect competition, monopolies, labor resources, game theory, the national income and gross domestic product, inflation and unemployment, fiscal policy, money and banking, monetary policy, economic growth, international trade and exchange, interest rate determination, and the market for loanable funds.