Balance of Payments
Balance of Payments (BOP) is a method that countries use to manage international financial transactions. Different countries conduct this analysis at different time periods throughout the fiscal year. They use the BOP as a checks and balances system that assesses the current financial status of credits and debits of the country. Reflect on your reading from this week and consider how the current account, capital account, and the official reserve account components affect a country’s BOP.
With these thoughts in mind, address the following:
- Summarize how the current account, capital account, and the official reserve account impact a country’s BOP.
- Explain which condition you think is more desirable for a country—a BOP surplus or deficit. Support your response using this week’s Learning Resources.