| A | B |
|---|
| Balance of Payments (BOP) | stmt of all transactions btw 1 country, world; record of flows of g,s, investments across borders |
| current account | acct in BOP stmt, records results of transactions involving merch, svcs, and unilateral xfers btw countries |
| financial account | account in BOP stmt, records transactions involving borrowing, lending, and investing across borders |
| double-entry bookkeeping | method of accounting in which every transaction produces both a dr and cr of the same amount |
| goods trade account | records export/import of goods. Merch trade is oldest and most traditional form of int’l economic activity |
| services trade account | records export/import of svcs. Some common int’l svcs are financial svcs provided by banks to foreign importers/exporters, travel svcs of airlines, and construction svcs of domestic firms in other countries. |
| income account | current income associated w/investments that were made in previous periods. If US firm created subsidiary in S. Kor. |
| current transfer account | CA on BOP, records gifts from residents of one country to residents of another |
| direct investment account | account in BOP stmt that records investments w/expected maturity of more than one year and investor’s ownership position of at least 10% |
| portfolio investment account | account in BOP stmt that records investments in assets w/original maturity of more than 1 year and where investor’s ownership position is less than 10% |
| net errors and omissions account | makes sure BOP actually balances |
| official reserves account | account in BOP stmt that shows change in amt of funds immediately available to country for making int’l pmts and borrowing and lending that has taken place btw monetary authorities of different countries either directly or through IMF |
| fixed exchange rate | govt of country officially declares that its currency is convertible into a fixed amount of some other currency |
| floating exchange rate | govt possesses no responsibility to declare that its currency is convertible into a fixed amt of some other currency; this diminishes role of official reserves |
