IB ECON Global Economy Key Terms 4.1-4.6

Balance of Payments

Balance of Payments

a system of recording all of a country's economic transactions with the rest of the world over a period of one year

Current account

that part of the balance of payments recording a nation's exports and imports of goods and services and transfer payments

balance of trade and goods and services transfer payments (i.e remittances) income from investments like interest

Capital account

that part of the balance of payments recording a nation's outflow and inflow of financial securities

transaction of non produced assets like land capital transfers like inheritance tax

Financial account

the part of the BOP that measure net change in foreign ownership of domestic finanical assets

foreign direct investment tracks long term investments into property, businesses by multinational corporations portfolio investment into stocks and bonds reserve assets of foreign exchange