Summary
Summary AQA A-level Economics: Balance of Payments (BOP) Notes
- Course
- Institution
Key Summary Notes for the AQA A-level Economics course on Balance of Payments (BOP) ,guaranteed to boost you to the top grades.
[Show more]
Seller
Follow
hamzakrashid
Content preview
Balance of PaymentsBalance of Payments = A record of the UK’s transactions with the rest of
the world in a given period of time.
What Makes up the BOP:
1) Current Account:
Current Account = Records national Income and Expenditure Flows,
primarily relating to trade in tangible and intangible goods.
- Current Account includes the Trade Account
- Current account DOES NOT MEASURE QUANTITY - it measures
VALUE
- Biggest Part of BOP
Trade Account = The trade in goods and services in an economy (Trade in
goods + Trade in Services)
- How much money is spent on imports and generated from export
revenue.
Income Account = Investments + Transfers = Net primary income + Net
secondary income.
- How much money is coming into the country and how much is
coming into the country.
Constituents of the Current Account:
1) Trade In Goods = Exports and Imports of Goods (X-M)
E.g foods, raw materials, manufacturers, semi-manufacturers
2) Trade In Services = Exports and Imports of Services (X-M)
E.g Finance, construction, transport, telecom, tourism
3) Net Primary Income = Incomes from interest,profits and dividends
generated from foreign Investment and migrant remittances.
E.g profit/interest/dividends from investments in other countries or migrant
remittances.
, 4) Net secondary income = Provision of an economic value by one party
without directly receiving a counterpart item of economic value.
‘Something for nothing’
E.g Payment of fees (EU), Contribution of Aid
- Current Account will be a net Negative or Net positive
Negative Current Account = Current Account Deficit
Positive Current Account = Current Account Surplus.
2) Capital Account: (don't need to know what is in it - Just that it
Exists)
- Sale/transfer of patents, copyrights, franchises and leases.
- Debt forgiveness.
3) Financial Account:
Financial Account = The transactions that result in a change of ownership
of financial assets and liabilities between Uk residents and non-residents.
Constituents of Financial Account:
1) Net balance of Portfolio Flows = Buying and selling of financial assets
- If overseas investors buy UK gov bonds = inflow into UK financial
accounts.
- If Uk individuals buy USA Shares - outflow of money from UK
financial accounts.
E.g Bonds, Shares
2) Net Balance of FDI
If a foreign firm sets up in UK - inflow into FDI part of financial account - hot
money inflows
If UK firms move to other countries - outflow of FDI part of financial account
- hot money outflows.
3) Balance of Currency Reserves = Reserves held by the central bank
of gold/ foreign currencies.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller hamzakrashid. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $5.84. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75632 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now