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Outline in detail the features of the balance of payments and its relationship with the current account deficit.
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Outline in detail the features of the balance of payments and its relationship with the current account deficit. The balance of payment (BOP) records the trade and money flows into and out of Australia and the rest of the world over a set amount of time. There are two main components in the Australia BOP and it includes the current account (CA) and the financial and capital account (KFA). The CA and KFA when added always equals zero, and any surplus in either account will become deficit on the other. The current account covers all goods and services, income and current transfers and is separated into four different types including goods account, services account, incomes account and current transfers account. The goods account and services account includes the export and import of goods and services, where exports are regarded as credit as Australia is receiving money returns. Conversely, the import of...
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