Component of balance payments, Macroeconomics

Component of balance payment:

BOP is a statement  that summarises all the economic transactions between residents (individuals, companies and other organisations) of the home country  and those of all other countries. BOP accounting  uses  the  system of double-entry book-keeping meaning  thereby that every debit and credit in the account is also represented as a credit or debit somewhere else. Current Account and Capital Account are the  two most important components of BOP. The following  is a brief review of  the concepts.

BOP on Current Account kcords flows of goods and services, and unilateral transfers such as gifts. The merchandise trade account is a major part of BOP for most countries. 1f merchandise exports of  a  country exceeds  its  Conversely, if  imports exceeds exports,  an unfavourable  balance of trade arises. In  short, the difference between such exports and imports is termed as trade balance. 

Non-merchandise items are known as invisibles. These are sub-divided into services, investment income and  transfer payments. Services include travel and tourism, transportation, financial,  insurance, government and a variety of miscellaneous services. For instance, India's software services have recently been the fastest growing  services exports.  Investment income refers to receipts and payments of dividends, interest and profit arising out of Indian investment abroad and  foreign investment in India. Transfer payments usually are in the nature of foreign aid, grants, gifts and  foreign workers' remittances to their home countries. NRI's  remittances  are  significant component of  transfer payments in India.  

Posted Date: 11/9/2012 4:50:20 AM | Location : United States







Related Discussions:- Component of balance payments, Assignment Help, Ask Question on Component of balance payments, Get Answer, Expert's Help, Component of balance payments Discussions

Write discussion on Component of balance payments
Your posts are moderated
Related Questions
Define the Consumer Prices Index Every month, the Office for National Statistics (ONS) collects information on about 120,000 prices for a 'shopping basket' of about 650 goods a

Describe the relation of money with wealth and income It is very possible to have a high income but no money and no wealth, or to be very wealthy and have a lot of money but no

Q. Relationship between number of hours worked and unemployment? In all models we presume a negative relationship between number of hours worked and unemployment. If number of

Consider the economic data for Country A: Unemployment level of 15% Natural Rate of Unemployment is 6%. Required Reserves is 25% C = 50 + 0.75Y; I = 600; G = 250 (note: T = 200 for


Since their inception, VAR models have been at the centre of many controversies associated with econometric modelling. The recurring criticism throughout history is due to the mode

What is Real GDP To be able to make reasonable comparisons of GDP over time, we must adjust for inflation. For instance, if prices are doubled over 1 year then GDP would doubl

Using Simple Keynesian Model, discuss the effect of the following: a) An increase in govt. expenditure. b) A decrease in lump sum taxes. In this context compare the govt.

Exchange Rate Management: Following two  stage devaluation of the Indian rupee  in quick succession in July 1991, the  government introduced Liberalized  Exchange Rate System

Q. Describe classical model of macroeconomics? Though we use the term ‘the classical model' as if there were just one classical model, this isn't quite true. For all the models