Notes on "International Trade"
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.
Represents the sum of all recorded transactions including traded goods, services, income, and net transfer payments.
Captures investment and financing flows; inflows have an appreciating impact on a given currency; outflows have the opposite, or depreciating, impact.
Trade surplus occurs when exports exceed imports (X – M > 0) and a trade deficit occurs when imports exceed exports (X – M < 0).