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Balance of payments (BOP) is a system of accounts that is a summary statement of all international transactions between the residents of one nation and the residents of other nations over a specified period of time that refer to the exchange of all goods, services (including travel and tourism), foreign aid, capital loans, income, foreign direct investments, short-term capital flows, and financial transfers coming in and going out, and the interrelations underlying all these items.

The BOP records inflows of currency from nonresidents as well as payments of residents to nonresidents (outflows of currency) having to do with international trade transactions undertaken by these entities in a period of a year or a quarter. Hereby, the BOP becomes a source of information, aggregated into a few ...

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