5
Concepts
1
Formulas
1
Decisions
2
Quiz Questions
5 concepts covered in this module.
Current account (trade, income, transfers) + Capital account + Financial account = 0. CA deficit = net capital inflow.
Goods trade balance + services + primary income (investment) + secondary income (transfers). Deficit = spending > income.
Direct investment, portfolio investment, other investment, reserve assets. Surplus = net capital inflow.
Largest financial market ($7.5T/day). OTC, 24-hour, major participants: banks, central banks, corporates, speculators.
Float (market-determined), Managed float (intervention), Fixed/Peg (tied to anchor), Currency board (strict peg with full reserves).
1 essential formulas for this module.
Where: When one account is in deficit, another must be in surplus
1 decision frameworks to guide your analysis.
Visual overview of how concepts connect in this module.
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Balance of Payments
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