04/21/2014 Balance of Payments

• A nation's balance of payments is the sum of all the transactions that take place between its residents and the residents of all foreign nation.
• Exports/ Imports of goods, services, tourist expenditures, interest and dividends.
• A balance of statement is made every year which is a statement that shows all the payments a nation receives from foreign countries and all the payments it makes to them.
• The US trade is currently produced goods and services is called the current account.
• Exports are indicated with a + sign because they are credit, imports have a - sign because they are debt.
• A country's balance of trade on goods in the difference between the exports and imports of goods.
• Trade surplus: exports of goods and services > imports
• Trade deficit: imports> exports
• The central bank of nations hold quantities of foreign currencies called official reserves.
• Balance of Payments Deficits and Surpluses: Imbalances between current and capital accounts that cause a drawing down or building up of foreign currencies.