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Lawrence D. Gwinn

In: 21st Century Economics: A Reference Handbook

Chapter 41: Balance of Trade and Payments

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Balance of Trade and Payments
Balance of trade and payments

The balance of payments registers the international financial position of a country, using a double-entry bookkeeping approach to tabulate the market value of the transactions in goods, services, and financial assets between the country's residents and the residents of the rest of the world. Like gross domestic product (GDP), the balance of payments encompasses transactions in goods and services produced during the year, but, unlike the GDP, the balance also encompasses transactions in assets. In addition to categorizing international transactions as debits or credits, the balance of payments separates private transactions in goods and services into the current account and transactions in assets into the capital account. Official government transactions, undertaken to affect the exchange rate, ...

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