AP Macroeconomics / Unit 6: Open Economy: International Trade and Finance
6.1 Balance of Payments Accounts
Notes
- Current account: trade in goods and services, investment income, transfers.
- Capital and financial account: purchases of assets (factories, stocks, bonds).
- Current account + financial account ≈ 0.
Practice
A US company buys a factory in Mexico. This is recorded in the US:
Asset purchase.
A current account deficit is usually matched by:
They balance.
Exporting software counts in the:
Trade in goods and services.
Ready for more? Take the Unit 6 test.