4. Foreign investment and the balance of payments
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4 Terms
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Where is the flow of foreign investment recorded?
In the financial account of the balance of payments
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What does a financial account surplus mean?
There has been a net inflow of foreign investment.
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What does a financial account deficit mean?
There has been a net outflow of foreign investment.
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How does foreign investment help to reduce the savings-investment gap?
Australia imports foreign savings from the rest of the world which makes the financial account balance equal to the difference between investment and savings
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