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Economics: An A-Z Guide by Matthew Bishop

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B

Backwardation

When a COMMODITY is valued more highly in a spot market (that is, when it is for delivery today) than in a futures market (for delivery at some point in the future). Normally, INTEREST costs mean that futures PRICES are higher than SPOT PRICES, unless the markets expect the price of the commodity to fall over time, perhaps because there is a temporary bottleneck in SUPPLY. When spot prices are lower than futures prices it is known as contango.

Balance of payments

The total of all the MONEY coming into a country from abroad less all of the money going out of the country during the same period. This is usually broken down into the current account and the CAPITAL account. The current account includes:

VISIBLE TRADE ...

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