what is Balance Of payments?Explain Its major components.why is it useful to compute a country's Balance of Payments?
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alyyis786
DEFINITION - Balance of payment is a complete record of various economic transaction between resident of the country and resident of rest of the world.
COMPONENTS - 1 current account- which is include export import of goods and services and one sided payments 2 capital account- it includes transaction of °Foreign direct investment +foreign institutional investment °external borrowings + external assistance °NRI deposit °banking deposit °short term credits °other flows 3 overall balance = current account balance + capital account balance + errors and omission.
It is important to compute the balance the BOP because it helps us to know the clear picture of country's economic position/status.
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COMPONENTS -
1 current account- which is include export import of goods and services and one sided payments
2 capital account- it includes transaction of °Foreign direct investment +foreign institutional investment
°external borrowings + external assistance
°NRI deposit
°banking deposit
°short term credits
°other flows
3 overall balance = current account balance + capital account balance + errors and omission.
It is important to compute the balance the BOP because it helps us to know the clear picture of country's economic position/status.