Quizzes & Activities
Balance of Payments (Revision Quizlet Activity)
- Level:
- A-Level, IB
- Board:
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 4 Jan 2022
Check and test your understanding of key terms relating to the balance of payments with this Quizlet revision activity
Summary of key terms on the balance of payments
Balance of payments: Records all financial transactions made between consumers, businesses and the government in one country with others
Balance of trade: The value of exports of goods and services minus value spent on imported goods and services
Capital account: Sale/transfer of patents, copyrights, franchises, leases and other transferable contracts, and goodwill
Current account: Overall balance of trade in goods and services and net balance for primary and secondary income
Current account deficit: A deficit occurs when the value of imports of goods/services / investment incomes / secondary incomes is greater than the value of exports
Current account surplus: A surplus occurs when the value of exports of goods/services / investment incomes / secondary incomes is greater than the value of imports
Financial account: Transactions that result in a change of ownership of financial assets and liabilities between countries
Foreign direct investment: Investment made by a firm or individual in one country into business interests located in another country
Hot money (short term capital) flows: Money that moves rapidly around the global financial system seeking the best "risk-adjusted" rate of return
Investment income: Income from equity (dividends) and on debt (interest)
Portfolio investment: Inflows and outflows of debt and equity
Primary income: Incomes from interest, profits, dividends from overseas investment and also migrant remittances
Secondary income: Includes spending on military aid and overseas development aid
Trade deficit: When the value of imports is higher than the value of a country's exports (M>X)
Trade surplus: When the value of exports is higher than the value of a country's imports (X>M)
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