Economics 2152A/B Lecture Notes - Capital Outflow, Capital Account, Portfolio Investment
Document Summary
A country"s balance of payments accounts keep track for its payments to and its receipts from foreigners. Any transaction resulting in a receipt from foreigners is entered in bop as a credit (+) item. Any transaction resulting in a payment to foreigners is entered in bop as a debit (-) item. Accounts for flows of goods and services (imports and exports), along with net transfers between countries. The components of the current account balance are: The merchandise trade is trade in goods: a car brought to canada from japan is a good merchandise import for canada. It is a credit item for japan (+) The trade in services includes, for example, transportation or tourism: a canadian tourist in mexico is import tourism services for canada. It is a debit item for canada (-) It is a credit item for mexico (+) The investment income is interest payments, dividends, royalties a country residents receive from assets owned abroad.