The Balance of
Payments
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Chapter Outline
Double Entry Accounting
Balance-of-Payments Structure
U.S. Balance of Payments
What Does a Current Account Deficit (Surplus) Mean?
Balance of International Indebtedness
The Dollar as the Worlds Reserve Currency
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The Balance of Payments
The Balance of Payments is a record of the economic transactions
between the residents of one country and the rest of the world
Records are kept annually and quarterly
An international transaction is an exchange of goods, services, or
assets between residents of one country and those of another
Residents include businesses, individuals, and government
agencies that make the country their legal domicile
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?? ????? ????? ?? ??????? ?? ?????? ??? ???? ??? ?? ????? ??? ??????????? ???????
???? ???????? ??????? ???????? ???????? ???????? ???? ???? ????? ?????? ????????
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Double-Entry Accounting (1 of 3)
Arranging international transactions into a balance-of-
payments account requires that each transaction be entered
as credit or debit. This is known as Double-Entry
Accounting.
A credit transaction results in a receipt of a payment
from foreigners; recorded with a +
A debit transaction is one that leads to a payment to
foreigners; recorded with a ?
. ???????? ????? ????????? ??????? ?? ???? ????? ????????? ????? ?? ?????? ??????? ?? ?
.?????? ????? ??????????? ??? ?? ???????
+???? ?? ? ??? ?????? ???? ?? ??????? ?????? ???????? ????
-?? ??? ???? ???? ??? ??? ????? ? ???? ?? ?????? ?????
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Double-Entry Accounting (2 of 3)
Examples of credits
Merchandise exports
Transportation and travel receipts
Income received from investments abroad
Gifts received from foreign residents
Aid received from foreign governments
Investments in U.S. by overseas residentsSelect a country of your choice and observe the last balance of payments issued by that country. Does the country run a current account deficit or surplus? What are the driving factors for the deficit or surplus? What are the implications of the current account deficit or surplus for the overall economy? What actions may better the nations situation? Explain.
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