What is the meaning
of a deficit (surplus) in (a) merchandise trade balance (b) balance on services (c) balnace in goods and services (d) balance on investment income, (e) balance on goods servecis and income, (f) balance on current accound and (g) balance on capital account?
Merchandise trade balance – A subset of the balance of payments current account that records the difference between the payments received for exports of goods to other nations and the payments made for the imports of goods from other nations. The goods included are physical or tangible goods. A merchandise trade surplus suggests that the home country is a net exporter of merchandise. The balance on merchandise trade is thus appropriately divided into merchandise exported and merchandise imported. Balance on services – Two other subsets of the current account include the balance on services and unilateral transfers. The commonly termed balance of trade is the sum of the balance on merchandise trade and the balance on services. These transactions result from an intangible action such as transportation, business services, tourism, royalties or licensing. Balance in goods and services – The balance of trade includes both the balance on merchandise trade and the balance on services and is officially termed the balance on goods and services in the balance of payments account. A goods and services surplus suggests that the home country transfers more real resources (goods and services) to other countries than it receives from them. Balance on investment income – A goods and services surplus suggests that the home country transfers more real resources (goods and services) to other countries than it receives from them. Balance on capital account – In addition to the current account,…
he balance of payments also includes the capital account, which tracks the flow ofinvestmentpayments in to and out of a country. Balance on goods services and income – Income is money going in (credit) or out (debit) of a country from salaries, portfolio investments (in the form of dividends, for example), direct investments or any other type of investment. Together, goods, services and income provide an economy with fuel to function. This means that items under these categories are actual resources that are transferred to and from a country for economic production. Balance on current account – A current account surplus means an excess of exports over imports of goods, services, income, and unilateral transfers. The current account also includes net income, such as interest and dividends, as well as transfers, such as foreign aid, though these components tend to make up a smaller percentage of the current account than exports and imports. The current account is a calculation of a countrys foreign transactions, and along with the capital account is a component of a countrys balance of payment.