About This Chapter
The Balance of Payments in International Finance - Chapter Summary
Learn about the balance of payments in international finance with this self-paced chapter. This series of expertly taught finance lessons shows you essential information about the System of National Accounts, foreign trade measurements, trade balance, strategic trade policies and much more. If you have any questions about these concepts, you'll be able to submit them to our instructors online. Use any computer or mobile device to study, and be sure to take the accompanying self-assessments to make sure you fully understand the information. When you're finished with the chapter, you should be able to:
- Explain how the System of National Accounts works
- Describe the measurement of foreign trade
- Recognize the components of financial, capital and current accounts
- Discuss how trade balances are achieved
- Evaluate the balance of payments and identify mechanisms that are used to adjust them
- Interpret strategic trade policies and international trade policy
- Summarize the history of modern U.S. trade relations
1. System of National Accounts & Balance of Payments
In this lesson, learn about the system of national accounts and the books dealing with international transactions: the balance of payments. Examine the common principles of both systems, and explore the main accounts in the balance of payments.
2. Balance of Payments with Financial Accounts: Measuring Foreign Trade
Learn about the balance of payments and the two key components that make it up. Discover what the financial/capital account is and how it relates to foreign trade and surpluses and deficits.
3. Financial Account: Components & Measurement
In this lesson, learn about a country's financial account. Identify its components and main subaccounts, and examine how this account is measured. Also, explore the differences between a financial account and a capital and a current account.
4. Capital Account: Components & Measurement
In this lesson, you'll learn about one of the three main accounts of a country's balance of payments: the capital account. We'll identify its components, explain how to measure it and explore the differences between capital, financial and current accounts.
5. Achieving Trade Balance: Trade Deficit and Surplus Examples
Find out what trade balance, trade deficit, and trade surplus are. Learn about some recent examples that help clarify trade deficit and surplus. Explore what countries have a surplus and what countries have a deficit.
6. Balance of Payments: Current Account & Measuring Foreign Trade
Find out what the current account is and the four main foreign trade components that it is comprised of. Similar to your bank account, learn how the current account is measured and what a deficit and surplus mean when talking about this economic indicator.
7. What Is a Current Account? - Definition & Examples
Every country that trades with another country, has an account that they use to keep track of trade in goods, services, money received from investments, and money donated. In this lesson, we will learn more about current accounts and look at some examples.
8. Mechanisms for Adjusting Balance of Payments
In this lesson, examine the different mechanisms that countries can use to correct imbalances in the balance of payments, including the adjustment of exchange rates, the adjustment of internal prices, and the rules-based adjustment.
9. International Trade Policy & Strategic Trade Policies
Governments sometimes intervene in international trade. In this lesson, we'll examine the arguments against strategic trade policy and discuss the policy instruments used by governments to influence international trade flows.
10. Modern History of U.S. Trade Relations
Since 1934, the United States has progressed from a protectionist stance towards trade to the globalized free trade we know today. We will cover some landmark legislation along the way as well as discuss the current trade deficits.
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Other chapters within the Finance 302: International Finance course
- Foundations of International Finance
- History of Money & Finance
- Globalization & Multinational Firms
- Foreign Exchange Markets
- Currency Changes in International Finance
- International Capital Markets
- Risk Management in International Finance
- Hedging & Strategic Decision Making
- Capital & International Financial Management
- International Financial Scams & Crises
- Required Assignments for Finance 302