Unit 7; Day 1

• Balance of Payments 
• Measure of money inflows and outflows between US and Rest of World(ROW)
• Inflows= CREDITS
• Outflows= DEBITS
• Balance of payments divided into 3 accounts
• Capital Account/Financial Account
• Official Reserves Account
• Current Account
• Current Account (Current Accounts Video)
• Balance of trade or Net Exports
• Exports of goods/services
• Import of good/services
• Exports create a credit to balance of payments
• Imports create a debit to the balance of payments
• Net Foreign Income
• Income earned by US owned foreign assets- Income paid to foreign held US assets
• Ex. Interest payments on US owned brazilian bonds- interest payments on german owned US bonds
• Net Transfers (Tend to be unilateral) 
• Foreign Aid> A debit to current account
• Ex. Mexican migrant workers send money to family in mexico
• Capital/ Financial Account (Capital Accounts Video)
• Balance of Capital Ownership
• Includes purchase of both real and financial assets
• Direct Investment in US is credit to capital account
• Ex. Toyota Factory in San Antonio
• Direct Investment By US firms/ Individuals in a Foreign country are debits to capital account
• Intel Factory in San Jose, Costa Rica
• Purchase of foreign financial Assets represent Debit to Capital Account
• Ex. Warren Buffett buys stock in Petrochina
• Purchase of Domestic Financial Assets by foreigners represent Credit to capital Account
• UAE Fund purchases a large stake in NASDAQ