The Foreign Exchange Market and the Balance of Payments Accounts (Grade 12 NSC Matric Economics): Flashcards
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Balance of Payments (BoP)
Balance of Payments (BoP)
Record of all financial transactions between a country & world
BoP surplus
BoP surplus
When inflows > outflows (more money comes in than goes out)
BoP deficit
BoP deficit
When outflows > inflows (more money goes out than comes in)
Number of main BoP accounts
Number of main BoP accounts
Four accounts
What current account tracks
What current account tracks
Production, income generation, and spending activities
Five categories in current account
Five categories in current account
Merchandise, gold, services, income, current transfers
What financial account records
What financial account records
Investment flows between residents and foreigners
Three types in financial account
Three types in financial account
Direct investment (FDI), portfolio investment, other investment
FDI ownership threshold
FDI ownership threshold
Typically 10% or more for substantial control
Portfolio investment characteristic
Portfolio investment characteristic
Highly liquid 'hot money' - can move rapidly between countries