Study notes

The Balance of Payments - Revision Playlist

  • Levels: A Level, IB
  • Exam boards: AQA, Edexcel, OCR, IB, Eduqas, WJEC

This study resource brings together updated videos covering many aspects of the balance of payments for A-level and IB economics.

The Trade Balance

In this video we consider the concept of the trade balance and look at updated figures for UK exports and imports of goods and services.

The Current Account

This revision video looks at the current account of the Balance of Payments, using data from the UK

The Financial Account

In this revision video we look at the financial account of a country's balance of payments.

The Capital Account

The capital account of a country's balance of payments is explained in this short revision video.

Financing a current account deficit

In this video we look at how a current account deficit can be financed. Essentially, countries that run external deficits need to be net importers of portfolio investment and FDI and hot money on their financial account. But capital inflows are not guaranteed and for many countries, a large external deficit can lead to a sharp drop in their foreign exchange reserves and may require emergency external borrowing.

Causes of a current account deficit

In this video we look at some of the underlying causes of a country running a current account deficit and make a distinction between short run and longer run explanations.

Current account deficit – chains of reasoning

In this video we work through three chains of reasoning helping to explain why a country might experience an increase in their trade deficit on the current account.

Balance of Payments - Expenditure-Switching Policies

In this video we consider some expenditure-switching policies that might be used if a country wants to improve their trade balance.

Balance of Payments - Expenditure-Reducing Policies

In this revision video we explain and evaluate the use of expenditure-reducing policies designed to reduce the size of a trade deficit.

Balance of Payments - Supply-Side Policies

In this video we explore the importance of supply-side policies for a government wanting to achieve a long-term improvement in their trade balance and current account.

Balance of Payments - J Curve and Marshall Lerner

In this video we explain the importance of the J Curve and the Marshall Lerner condition when evaluating the impact of a currency depreciation on a country's trade balance.

Balance of Payments - Current Account (External) Surpluses

In this video we look at countries running large external current account surpluses.

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