6.1 Balance of Payment Accounts

Match the following Current Account Terms

• Balance of Trade

• Foreign Factor income - Foreign factor payments

• Net Transfers

• Transfers in - Transfers Out

• Net Foreign Factor Income

• Net Exports, Exports - Imports

Match the following Financial/Capital Account Terms

• Net official reserves

• Foreign direct investment in US - US direct investment abraod

• Net portfolio Investment

• Fed Sells foreign currency - Fed buys foreign currency

• Net Foreign Direct Investment

• Foreign Investment in US - US investment abroad

The current account + the financial account = ???

• 0

• +

• -

Is the current account always balanced?

• Yes

• No, it can run surpluses

• No, it can run deficits

• No, it can run surpluses and it can run deficits

The balance of payments (BOP) is an accounting system that records a country’s international transactions for a particular time period. It consists of ???

• Current account

• Financial/Capital Account

• a scale that is always balanced

Credit or Debit? Current Account or Financial Account?

Bob purchases $50,000 worth of common stock in Korean manufacturer Hyundai.

• Credit

• Debit

• Current Account

• Financial Account

Credit or Debit? Current Account or Financial Account?

2. A buyer for Macy’s purchases $1 million dollars worth lamb’s wool sweaters from a New Zealand textile firm.

• Credit

• Debit

• Current Account

• Financial Account

Credit or Debit? Current Account or Financial Account?

Toyota builds a factory in San Antonio, Texas.

• Credit

• Debit

• Current Account

• Financial Account

Credit or Debit? Current Account or Financial Account?

The Lorax, an American, purchases a Japanese made Toyota Prius.

• Credit

• Debit

• Current Account

• Financial Account

Credit or Debit? Current Account or Financial Account?

Boeing sells a new 787 to Emirates Air.

• Credit

• Debit

• Current Account

• Financial Account