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Jump to Revision Questions for chapter 2
Chapter IntroductionBefore considering various policy options that may be devised to deal with perceived problems in the balance of payments, we need to consider in some detail exactly what the balance of payments figures are and what is meant by the notion of a balance of payments surplus or deficit. In this chapter, we shall look at what is contained in the balance of payments statistics, how they are compiled and at various possible economic interpretations of the statistics. We also look at how the current account of the balance of payments can be interpreted within the framework of the national income accounts and the effects of changes in governments’ expenditure and exports on the balance of payments.
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