Macro 6.1 Balance of Payments
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Күн бұрынThis video covers topic 6.1 of the AP Macroeconomics Course Exam Description (CED). This video is all about the balance of payments, capital inflows and outflows, trade deficits and surpluses, etc.
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I would like to acknowlege the work of Dick Brunelle and Steven Reff from Reffonomics.com who’s work inspired many of the review games on ReviewEcon.com. I would also like to thank Francis McMann, James Chasey, and Steven Reff who taught me how to be an effective AP Economics teacher at AP summer institutes; as well as the countless high school teachers, and college professors from the AP readings, economics facebook groups, and #econtwitter.
@cartilo2619 4 ай бұрын
the balance of payments game was great esp with explanations like "resources leave the country so it's sale of capital good", helped me distinguish them from assets, thanks for the helpful resources!
@ReviewEcon 4 ай бұрын
You're very welcome! Good luck with your exams!
@iunlisted1176 7 ай бұрын
saving my grades fr fr
@American_2 7 ай бұрын
fax
@ReviewEcon 7 ай бұрын
Awesome! Good luck with your exams!
@amyliu7745 Ай бұрын
At 1:55, if the income earned from the investment is going to be counted in the current account, what is counted in the capital and financial account of a direct foreign investment then?
@ReviewEcon Ай бұрын
The original purchase of the investment is CFA. So if I buy Alibaba stock, that is CFA, when I earn dividends on that stock those dividends are CA.
@myplace571 Ай бұрын
by any chance did you switch surplus and deficit? everywhere online its the opposite so im a bit confused. shouldnt trade surplus be exports>imports ?
@ReviewEcon Ай бұрын
I think my scale graphic may have been a bit strange, but that is what I said and meant (United you are referring to a different part of the video than I expect). But the graphic looks the opposite to some people. Good luck!
@ziad975 Ай бұрын
I didnt get why it should balance out? why would a decrease in the current account cause and increase in the financial account?
@ReviewEcon Ай бұрын
Gets a little above the introductory class and all you need to know on the AP exam is that they always balance out. But... If I buy something from China, I will sell my US dollars. The purchase of the good from China is counted in the current account for the value of the good. The selling of US dollars is actually counted as an outflow in the capital and financial account as well. This dual entry accounting means the accounts always automatically balance each other out. Also, when there are changes in capital inflows and outflows, it leads to changes in exchange rates, which change the relative prices of imports and exports, which leads to a balancing out in the current account. But in the meantime, dual accounting in the capital and financial account means that the capital flows don't actually change the Capital and financial account immediately. But again, this is not part of the AP exam. You only need to know if they automatically balance out. And you don't really need to know about the flows of currency as being part of the Capital and financial account. Good luck on Friday!
@leos8292 Ай бұрын
@@ReviewEconhelpful, thanks! All the videos including AP board just say they balance and never really explain why.
@amyliu7745 Ай бұрын
At 2:30, is debit the same thing as debt?
@ReviewEcon Ай бұрын
Debit is the term used for a decrease in the balance. Not necessarily negative balance just decreasing.
@amyliu7745 Ай бұрын
@@ReviewEcon Oh okay gotcha. So is deficit the same thing as debt then?
@ReviewEcon Ай бұрын
@amyliu7745 for the balance of payments, deficit means negative value. I hesitate to use the word debt as it isn't owed to anyone or anything.
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