Definition Of Balance Of Payments In Economics

It consists of goods and services account primary income account secondary income account capital account and.

Definition of balance of payments in economics. The balance of payments henceforth bop is a consolidated account of the receipts and payments from and to other countries arising out of all economic transactions during the course of a year. Or bop of a country is the difference between all money flowing into the country in a particular period of time e g a quarter or a year and the outflow of money to the rest of the world these financial transactions are made by individuals firms and government bodies to compare receipts and. It can be broken down into sub accounts including the current account and the capital financial account. Usually the bop is calculated every quarter and every calendar year.

The balance of payments of a country is. The balance of payments has three components the current account the financial account and the capital account current accounts measure international trade net income on investments and direct payments. The transaction in goods services and income between an economy and the rest of the world 2. The official record of the payments for goods services and investments between the uk and the rest of the world.

The balance of payments is the record of all international trade and financial transactions made by a country s residents. In the words of c. Records all financial transactions made between consumers businesses and the government in one country with others. The balance of payments bop is the method countries use to monitor all international monetary transactions at a specific period.

According to the rbi balance of payment is a statistical statement that shows 1. The balance of payments bop is a statement of all transactions made between entities in one country and the rest of the world over a defined period of time such as a quarter or a year. Balance of payments account. Definition of current account financial capital account.

Definition of balance of payments shows a countries transactions with the rest of the world. Key terms to know when studying the balance of payments. Changes of ownership and other changes in that economy s monetary gold special drawing rights sdrs and financial claims on and liabilities to the rest of the world and. Maintaining a balance of payments with the rest of the world is a macro economic objective in simple terms if the balance of payments balances then the combined receipts from selling goods and services abroad and from the return on investments abroad equals the combined expenditure on imports of goods and services and investment income going abroad.