Balance of Payments

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Balance of Payments
The balance of payments is the sum of all transaction that Australia has with the rest of the world. These figures are presented in two accounts- the current account and the capital and financial account. The capital and financial account are comprised of reversible transactions while the current account covers external transactions that are non- reversible. The balance of payments always balances but since the 1980s, Australia has persistently experienced a large Current Account Deficit (CAD).
The balance of payments is based on a double entry system (ie credits and debits) of ledger accounts known as the current account and the capital and financial account.
Current Account
The current account records all transactions of a current nature involving money received (income) and money spent (expenditure) for M and X of g/s, income and transfers. These transactions are non-reversible (money has either been received or spent)

BOGs- Balance on god and services
-Shows aussie X/M patterns
* Exports (goods credits) and imports (goods debits) * X divided into rural and non rural * M classified as consumption, capital or intermediate * Tangibles

Services * Exports (credits) and imports (debits) * Tourism, education, shipping, finance * Intangibles

Net income * Income received from aussie owned assets over seas minus payments of income for foreign owned assets in Aust * Big factor in deficit * Interest and dividends paid to debt/equity coming into Aust and out * Money going out is more → larger deficit

Current Transfers * Receipts minus payments of money to foregn aid, migrants’ funds and pensions * Capital items for the category are recorded in the capital…...

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