2.1.4 Balance of Payments

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4 Terms

1
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BOP (Balance of payments)

a set of accounts showing the transactions conducted between the residents of a country and the rest of the world

2
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Current account of the BOP

an account identifying transactions in goods and services between the country and the rest of the world

3
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What is the number the overall balance of payments must be at?

zero

4
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Real Balance Effect

an increase in average price level reduces purchasing power and thus the quantity demanded