Balance of Payments (BOP) (Economics)

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  • A summary statement of the economic transactions between the residents of one country and the rest of the world. Tran sactions that result in the receipt of payments from foreigners are recorded as credits, and transactions that cause payments to be made to foreigners are recorded as debits. A double-entry accounting (bookkeeping) procedure is used to record all transactions, once as a credit or debit and then as an offsetting debit or credit. Errors and omissions are characterized as statistical discrepancies.

    In an ideal situation, credits must be equal to debits for BOP to be in equilibrium. When credits exceed debits, a nation is said to have a BOP surplus. Conversely, when debits exceed the surplus, a nation is said to have a BOP deficit. Deficits ...

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