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Balance of Payments - Essay

  • Date Submitted: 02/10/2012 04:13 AM
  • Flesch-Kincaid Score: 32.7 
  • Words: 775
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BALANCE OF PAYMENTS
Introduction
                        In the modern world there is hardly any country which is self sufficient in the sense that is produce all goods and services that it needs every country imports from other countries the goods that can not be produced at higher cost than foreign supplies similarly a country experts to other countries the goods & services that prefers to buy so the balance of payment is all about the imports and experts.
Definition
                      “The balance of payment is a comprehensive record of economic transactions of the residents of a country with rest of the world during a given period of time”
Purpose
                  The main purpose of keeping these record is to inform government of the international economics Pakistan of the country to help it in making decision about monetary and phiscal policy on the one hand and trade and payments on the other.
when transaction is credited and debited????
  When a payment is receive from a foreign country it is a credit transaction where a payment to a foreign country is debit transaction.
Principal items included on the debit & credit side of the balance of payment.
  A- The principle items shown on credit side are export of goods and services transfer receipts in form of sift etc from foreisers borrowing from abroad, foreigners direct investment and official sale of reserve   assets including goold & foreign countries.
  B- Debit side
            The principal items on debit side includes imperts of goods and services transfer payments it foreigners lending to foreign countries investment by residents in foreign countries. official purchase of reserve assets or gold from foreign countries.
How the (BOP) A/C is shaped?
      The credit and debit items are shown vertically in BOP account of a country horizontally they are divided into 3 categories,
  a) The current account
  b) The capital account
  c) The official settlement account/official...

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