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Shams Kabir The Balance of Payments




1) What is the difference between the current account and the capital account (now
called the financial account)?

Current account ­ measures trade in goods and services and net investment incomes and transfers.

Capital account ­ tracks capital flows in and out of the…

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Shams Kabir The Balance of Payments




but the rise in inflation and interest rates would have a negative effect on demand, output and
employment.

3) Evaluate the policies that can be used to correct a current account current account
deficit.

Expenditure reducing policies

Contractionary fiscal policy ­ an increase in…

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