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International Trade

Author: Kate Eskra
Video Transcript
Terms to Know
Balance of Payments

A record of all monetary transactions that flow across a country’s border; two major components are the current account and the capital account.

Capital Account

Captures investment and financing flows; inflows have an appreciating impact on a given currency; outflows have the opposite, or depreciating, impact.

Current Account

Represents the sum of all recorded transactions including traded goods, services, income, and net transfer payments.

Trade Surplus/Deficit

Trade surplus occurs when exports exceed imports (X – M > 0) and a trade deficit occurs when imports exceed exports (X – M < 0).