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Economic and financial flows - Coggle Diagram
Economic and financial flows
Balance of payments
Economic indicator
Tracks transactions
Individuals
Rest of world
Defined period
Bi-annual
Annual
Most common
Quarterly
Government bodies
Businesses
Three parts
Capital account
Records transfers of capital
To and from abraod
E.g. German factory built in Brazil
Debit German capital account
Credit brazil capital account
Financial account
Record financial inflows
Claims or liabilities
Non-residents
Reserve assets
Commodities
Held by monetary authorities
E.g. Central banks
Other financial capital
Currencies
Direct investments
Portfolio investments
Current account
Registers payments
Imports & exports
Trade in goods/services
Transfer of money
to and from abroad
Individuals Income
Surplus
Borrowing money
Purchase good and services
As imports
Influence global balance
Deficit countries reduce spending
Borrow or sell assets
May damage economy
Long-term problem
Could cause recession
Deficit
Saving money
Little overseas investment
Producing domestically
Reduces aggregate demand
Must balance
Technical requirement
Understand comparative position
Country 1 vs country 2
Foreign direct investments
Manufacturing Plant
Country A invests in country B
Become multi-national
Not portfolio investments
E.g. shares
Offices