________: as exports increase, demand for the currency increases and the value of the currency increases.
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Reserve assets
________: foreign currencies purchased to be used by the central bank in its monetary policy.
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3
Expenditure
________ reducing policies: policies aim to reduce the real spending of consumers.
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4
Current account deficit
________: the country is a net borrower to the rest of the world.
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5
Capital transfers
________: debt forgiveness, non- life insurance claims and investment grants.
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Components of BOP
________: total current account must balance with total of capital and financial accounts.
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domestic consumption
Lower ________ and investment: currency appreciates, imports will become more affordable compared to domestic products so consumption of domestic products falls.
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8
Direct investment
investment in physical capital usually undertaken by multinational corporations
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9
Portfolio investment
purchase of shares and bonds
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10
Reserve assets
foreign currencies purchased to be used by the central bank in its monetary policy
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11
Capital transfers
debt forgiveness, non-life insurance claims and investment grants
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12
Non-financial asset transfers
purchase or use of natural resources that have no been produced
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13
Current transfers
transfers of money where nothing is received in return
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14
**Components of BOP**
total current account must balance with total of capital and financial accounts
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15
**Balance of payments**
record financial transcripts made between consumers, businesses and the government in one country with others
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16
Balance of payments
record financial transcripts made between consumers, businesses and the government in one country with others
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17
Current transfers
transfers of money where nothing is received in return
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18
Non-financial asset transfers
purchase or use of natural resources that have no been produced
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19
Portfolio investment
purchase of shares and bonds
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20
Direct investment
investment in physical capital usually undertaken by multinational corporations
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21
Current account balance
sum of capital account and financial account balances
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22
Current account surplus
indicates that the country is a net leader to the rest of the world
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23
Current account deficit
the country is a net borrower to the rest of the world
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24
Reduced export competitiveness
currency appreciates, in a floating exchange rate, exports become comparatively more expensive as demand for exports fall
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25
Lower domestic consumption and investment
currency appreciates, imports will become more affordable compared to domestic products so consumption of domestic products falls
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26
Expenditure switching policies
devaluing exchange rate, tariffs and policies to reduce inflation
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27
Expenditure reducing policies
policies aim to reduce the real spending of consumers
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28
Supply-side policies
to improve the countrys productivity in order to improve its exports competitiveness
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