Saturday 9 November 2013

Trade balance, invisible transfers , current account , capital account and the balance of payments

Solution: 

The trade balance is the difference between the monetary value of exports and imports of output in an economy over a certain period . Is the relationship between imports and exports of a country. A positive balance is known as a trade surplus if it is exporting more than it imports , a negative balance is known as a trade deficit or , informally , a trade deficit. The balance of trade is sometimes divided by a combination of goods and services.

The Invisible Balance balance transfer service is the part of the trade balance with respect to the services and other products that do not result in the transfer of physical objects . Examples include consulting services , transportation services , tourism and income from patent licenses. This figure is usually generated by the tertiary sector . The term " invisible balance ' is especially common in countries that depend Kingdom.For States exports and tourism services , the balance invisible is particularly important. For example , the UK and Saudi Arabia are major international revenue services financial , while Japan and Germany rely more on exports of manufactured goods.

The current account balance is one of the two main measures of the nature of a country's foreign trade ( the other is the net capital outflow ) . The current account surplus increased net foreign assets of a country by the corresponding amount , and a current account deficit does the reverse . Both government and private payments are included in the calculation. It is called the current account because goods and services are generally consumed in the current period. The trade balance is the difference between a country's exports of goods and services and imports of goods and services , taking into account all financial transfers , investments and other components. A nation is said to have a trade deficit if it is importing more than it exports .

The capital account : one of the two main components of the balance of payments , the other being the current account. While the current account reflects the net income of a country , the capital account reflects the net change in national ownership of assets.
The surplus in the capital account means money is flowing into the country but unlike a current account surplus , inflows will be effective loans or asset sales rather than profits. A deficit in the capital account is money that is flowing out of the country , but also suggests the nation is increasing its claims on foreign assets. The term " capital account " is used with a narrower meaning by the International Monetary Fund ( IMF) and affiliates. The IMF is divided so that the rest of the world calls the capital account into two first-level divisions : financial account and capital account, by far most of the transactions recorded in the financial account .


Accounts balance of payments ( BoP ) is an accounting record of all monetary transactions between a country and the rest of world.These operations include payments for the country's exports and imports of goods, services , financial capital and transfers financial . The balance of payments accounts summarizes international transactions for a given period , usually one year, and are prepared in a single currency, typically the domestic currency of the country concerned . The sources of funds for a nation , such as exports or the receipts of loans and investments , are recorded as positive or surplus items . Use of Funds , and for imports or to invest abroad , are recorded as negative or deficit items . When you include all the components of the accounts of the balance of payments must sum to zero with no overall surplus or deficit . For example , if a country is importing more than it exports , the trade balance deficit , but the deficit will have to be countered by other means - such as by funds earned from its foreign investments , by running the central bank reserves or by receiving loans from other countries.

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