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    Balance of Payments

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    sunny_lfu
    The document discusses the balance of payments, which tracks a country's transactions with other countries. It has a current account that includes merchandise trade and invisible trade. It also has a capital account that tracks short-term and long-term international borrowing and lending. A disequilibrium in the balance of payments can be caused by natural factors, economic factors like inflation, and political factors. Measures to correct a disequilibrium include automatic adjustments as well as deliberate measures involving trade policies, monetary policies, foreign loans and investments, and incentives for foreign tourists. Foreign exchange involves the demand and supply of foreign currencies and determining an equilibrium exchange rate.

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    Balance of Payments

    Uploaded by

    sunny_lfu
    59 views8 pages
    The document discusses the balance of payments, which tracks a country's transactions with other countries. It has a current account that includes merchandise trade and invisible trade. It also has a capital account that tracks short-term and long-term international borrowing and lending. A disequilibrium in the balance of payments can be caused by natural factors, economic factors like inflation, and political factors. Measures to correct a disequilibrium include automatic adjustments as well as deliberate measures involving trade policies, monetary policies, foreign loans and investments, and incentives for foreign tourists. Foreign exchange involves the demand and supply of foreign currencies and determining an equilibrium exchange rate.

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    The document discusses the balance of payments, which tracks a country's transactions with other countries. It has a current account that includes merchandise trade and invisible trade. It also has a capital account that tracks short-term and long-term international borrowing and lending. A disequilibrium in the balance of payments can be caused by natural factors, economic factors like inflation, and political factors. Measures to correct a disequilibrium include automatic adjustments as well as deliberate measures involving trade policies, monetary policies, foreign loans and investments, and incentives for foreign tourists. Foreign exchange involves the demand and supply of foreign currencies and determining an equilibrium exchange rate.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as ppt, pdf, or txt
    59 views8 pages

    Balance of Payments

    Uploaded by

    sunny_lfu
    The document discusses the balance of payments, which tracks a country's transactions with other countries. It has a current account that includes merchandise trade and invisible trade. It also has a capital account that tracks short-term and long-term international borrowing and lending. A disequilibrium in the balance of payments can be caused by natural factors, economic factors like inflation, and political factors. Measures to correct a disequilibrium include automatic adjustments as well as deliberate measures involving trade policies, monetary policies, foreign loans and investments, and incentives for foreign tourists. Foreign exchange involves the demand and supply of foreign currencies and determining an equilibrium exchange rate.

    Copyright:

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    Balance of Payments

    Meaning
    Balance of Trade & Balance of Payments
    Balance of Payments: Answers
    What kind of things do
    governments wish to know?
    What is the international
    demand for our currency
    doing to its value?
    Do we have enough currency
    reserves, or capacity to pay
    for our trade?
    Does our trade promote full
    employment? And so on.
    Structure of Balance of payments

    • Balance of Payments - Current Account


    i) Merchandise of the Trade A/c
    ii) Invisible A/c

    • Balance of Payments – Capital Account


    Includes short term as well as long term
    international borrowing & lending
    Disequilibrium in Balance of Payments
    • Meaning
    • Causes of Disequilibrium
    1 Natural Factors
    2 Economic factors
    - Cyclical Fluctuations
    - Inflationary rise in prices
    - Capital Movements
    - Miscellaneous Factors
    3 Political Factors
    Measures to correct Disequilibrium in Balance of Payments

    • Automatic Measures
    • Deliberate Measures:
    1 Trade Measures
    - Encouragement to exports
    - Reduction in Imports
    - Import quota system 2 Monetary
    Measures
    - Currency devaluation
    - Money Contraction
    - Exchange control
    continued

    - Foreign Loans
    - Encouragement to Foreign Investment
    - Incentives to Foreign tourists
    Foreign Exchange

    • Meaning
    • Problems of foreign exchange
    • Methods of foreign Payments
    - Export of commodities
    - Export of Gold
    - Payment through Foreign Exchange Bills
    • Demand & Supply of Foreign Currency

    • Equilibrium Rate of exchange


    • ‘Favorable’ & ‘Unfavorable’ Rate of
    Exchange
    • Parity of Exchange
    • Purchasing power Parity Theory

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