AS Macroeconomics - all you need to know about the Balance of Payments

Everything you need to know for AS about the Balance of Payments. Covers both the Current and Capital Account, deficit and surplus, as well as the solutions (both demand side and supply side) to a Current Account deficit :)

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Balance of Payments
A balanced Balance of Payments is another of the Governments four major macroeconomic objective
­ although it has taken the backseat for a few years now. This should be everything you need to
know for this section.

What is it?
The Balance of Payments is a record…

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Solutions to a Current Account Deficit

If the problems are Demand Side (that is caused by excess demand in our
economy meaning that consumers are likely to buy a high level of imports:
Raising interest rates ­ lessens overall demand and hence demand for imports
Devaluation of the Exchange Rate…

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