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FINANCIAL MARKET COURSES

Macroeconomics – Balance of Payments

The balance of payments is a statement that summarizes the economic transactions of a country with the rest of the world during a specific time period, usually a year or quarter. It records all payments made to other economies as well as all payments received from other economies.

 

This course introduces the concept of the balance of payments. Beginning by looking at the sub-components of this statement – the current and capital and financial accounts – the course then moves on to explain how transactions are recorded in the balance of payments, and why it must always balance. The course concludes by looking at the politically-charged issue of funding balance of payments deficits.

  • OBJECTIVES

    On completion of this course, you will be able to:

    The sub-components of the balance of payments and the various debit and credit entries in these accounts

    Describe how the overall balance of payments is recorded as the sum of the various transactions across the current account and capital and financial account, and why it must balance

  • COURSE OUTLINE

    Topic 1: Fundamentals of the Balance of Payments

    What is the Balance of Payments?

    Balance of Payments – Sub-Components

    Current Account

    o The Balance of Trade

    o Income

    o Unilateral Current Transfers

    Current Account – Putting it All Together

    Capital & Financial Account

    o Capital Account

    o Financial Account

    Topic 2: The Balancing Act

    Why Must the Balance of Payments ‘Balance’?

    Balance of Payments – Recording Transactions

    Step 1: Exchanging of Currencies

    Step 2a: Purchasing the Good

    Step 2b: Purchasing the Good

    Summary of Transactions

    Alternative Step 2b: Purchasing Shares

    Summary of Transactions

    Balance of Payments Identity

    Funding a Balance of Payments Deficit

    Funding Longer-Term Deficits

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    60 Minutes

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