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A record of all monetary transactions that flow across a country’s border; two major components are the current account and the capital account.
Captures investment and financing flows; inflows have an appreciating impact on a given currency; outflows have the opposite, or depreciating, impact.
Represents the sum of all recorded transactions including traded goods, services, income, and net transfer payments.
Trade surplus occurs when exports exceed imports (X – M > 0) and a trade deficit occurs when imports exceed exports (X – M < 0).