Balance of payment

Content:
► Meaning
► Characteristics
► Balance of payments accounts
► Balance Of Payments & Balance Of Trade
► Causes of disequilibrium in BOPs
► Method of correcting disequilibrium
 Meaning
BOP is the systematic record of all
economic transactions done by nation
with the rest of the world. During a year
period of time.
 Characteristics

BOPs is the systematic record of all economic

transactions with the rest of the world.
BOPs related to period of time.
BOPs includes the BOTs in it.
It includes all transactions current as well as
capital.
 Cont….
It includes the receipts & payments of the country.
It is just like a balance sheet.
It is based on double entry book keeping system.
It is not balanced generally it contains some
induced transactions for make it balanced & these
transactions done deliberately.
Balance of payments
Accounts

1. Current a/c.
2. Capital a/c.
3. Official reserve a/c.
Balance of trade & balance of
payments
 Causes of Disequilibrium in
BOPs
Natural factors
Economic factors
ü Recession in foreign countries.
ü Inflation
ü Change in exchange rate
Method of correcting
Disequilibrium

Monetory policy
Reduction in Imports
Increase in Exports
Devaluation of currency
Thank you