Managerial Economics

Chapter 24

Balance of Payments and the International Monetary System

After studying this chapter, you should be able to understand:

• The balance of payment is a statement, which summarizes the exports and imports and the other international transactions between the countries.
• The transactions entering into the balance of payments can be grouped under three broad accounts: Current Account, Capital Account and Official International Reserve Account.
• The current account of the balance of payments measures the flow of goods, services and income, which occur across the national borders. The capital account of the balance of payments measures the outflow and inflow of capital into the economy.
• The balance of payments of a country will always balance ...