ECON 162 Lecture Notes - Lecture 22: Double-Entry Bookkeeping System, Japanese Yen, Bookkeeping
Document Summary
Goods and services that are produced at home and sold abroad. Goods and services produced abroad and purchased at home. A record of one country"s trade in goods, services, income, and financial assets with the rest of the world. Balance of payments consists of two primary accounts: Measures flows of goods, services, income, and transfers between countries. If current account > 0 = trade surplus. If current account < 0 = trade deficit. Stocks, bonds, derivatives, firm assets, land, bank loans. Each transaction is entered twice as both a credit (+) and a debit (-) Activity: john deere exports a tractor and receives ,000 from a french winery. Activity: french winery imports tractor and transfers ,000 from a us bank account to john deere. Due to double entry bookkeeping, the overall balance of payments must always be 0. Any deficit in one account must be financed by having a surplus in the other account.