ECON 2020U Study Guide - Final Guide: Foreign Exchange Market, Loanable Funds, Currency Appreciation And Depreciation
Document Summary
Balance of payments account distinguish between transactions that don"t create liabilities and those that do. Transactions that don"t create liabilities are considered part of the balance of payments on current account. Transactions that create future liabilities are considered part of the balance of payments on (financial account/capital account) The balance of payments on current account, or current account, is the balance of payments on goods and services plus net international transfer payments and factor income. The balance of payments on goods and services is the difference between exports and imports during a given period. The merchandise trade balance is the difference between a country"s exports and imports of goods; it does not include services. The balance of payments on financial account, or financial account, is the difference between sales of assets to foreigners and purchases of assets from foreigners during a given period.
