• Foreign Trade and the Balance of Payments.
• FOREIGN TRADE & BALANCE OF PAYMENTS.
Foreign trade is the exchange of goods and services between different countries.
BALANCE OF PAYMENTS.
Balance of Payment is the record of a nation's international transactions.
FOREIGN TRADE.
PAKISTAN EXPORT TRANSACTION.
Assume that the exchange rate is Rs. 10 for $ 1.
Suppose a Pakistani based firm sells cotton worth Rs. 50,000 $5000 to an American company. .
Pakistani exports create a foreign demand for rupees .
Satisfaction of this demand generates a supply of rupees.
Financing of this Pakistani export (American import):.
Reduces the supply of money (demand deposits) in America.
Increases the supply of money in Pakistan by the amount of purchase.
PAKISTAN IMPORT TRANSACTION.
Suppose a Pakistani based firm buys 2 computers from an American company. .
One computer costs $5000 (Rs. 50000), hence two would cost $ 10000 (Rs. 100000). .
Pakistani imports create a domestic demand for foreign currency, dollars.
Increases the supply of money (demand deposits) in America.
Decreases the supply of money in Pakistan.
BALANCE OF PAYMENTS.
Balance of payments is the record of a nation's international transactions, it includes both credits and debits. It can be referred to as the Balance Sheet of the country. .
The balance of payments is divided into two main parts:.
Current account.
Capital account.
CURRENT ACCOUNT.
It is the part of the Balance of Payment, which records all types of flows that matter for the current income and output, for a fiscal year. .
The main components of the current account are:.
1) Exports of goods.
2) Imports of goods.
3) Trade Balance.
4) Exports of Services .
5) Imports of Services.
6) Balance on goods and Services.
7) Net Investment Income .
8) Transfer Payments.
9) Balance on current account.
MAIN COMPONENTS OF CURRENT ACCOUNT.
EXPORTS OF GOODS.
Create a supply of foreign currency (in flows credits).
IMPORTS OF GOODS.
The study of macroeconomics examines interactions of individuals on a very large scale. ... This paper discusses a few scenarios that we see every day including purchasing groceries, massive layoffs, and decreasing taxes that show the importance of macroeconomics. ... Conclusion Macroeconomics gives us a basic understanding of societal behavior on an overall larger scale. ...
The macroeconomic variables are the independent variables and the stock prices are the dependent variables. The regression will analyse if the stock prices are "dependant- on the macroeconomic variables i.e. is there a statistically significant relationship between stock prices and certain macroeconomic factors. This statistical relationship can be used to deduce if and how macroeconomic factors affect stock market volatility. ... The following are the suggested relationships between stock price and each macroeconomic factor: CPI: The CPI is also a measure of inflation in macroeconomic ...
The region's tradition of macroeconomic stability In a globalised world where market anxieties can spread quickly from one country to another, thus exposing underlying weaknesses and policy inconsistencies, sound prudent macroeconomic management receives even more importance than in the past. ...
The IMF "standard form is a set of quantitative conditions on macroeconomic variables attached to a stand-by agreement."" ... However, in continuing the application of the same conditions designed to regain macroeconomic stability after macroeconomic stability has been restored seems unreasonable. ... This usually requires the same strong macroeconomic medicine for different countries just as doctors prescribe antibiotics for individual cases of pneumonia. ... At that point, macroeconomic concerns should become only one factor along with growth, poverty reduction and public education. This...
Microeconomic policies are also complementary to the government's macroeconomic strategy. ... For this reason both microeconomic and macroeconomic policies have been the focus of government policy since the 1980s. Realisation that the traditional macroeconomic policies were limited in addressing issues related to current account deficits, low levels of national saving and structural unemployment. ... The objectives of microeconomic reform are also linked to macroeconomic objectives. If microeconomic reforms are successful, they will contribute to a better Australian macroeconomic performa...
In this essay I will be comparing the UK economy with that of the US, based on macroeconomic performance. To begin with I will set out what the most important dimensions in macroeconomic performance are. ... Macroeconomics is the study of the economy as a system . ... A country's macroeconomic performance is based on a variety of factors such as unemployment, exchange rate, inflation, GDP (Gross Domestic produce) etc. ... So there are three dimensions of macroeconomic performance that I feel would be important in assessing a countries macroeconomic performance. ...
Another important macroeconomic factor that should be taken into consideration would be that Tip-Top is one of a number of similar businesses in the local area. This means that they must consider their competitors, making competition another important macroeconomic consideration. ... Distribution channels include direct marketing through stores which are also a macroeconomic factor. ...
Economy 201 - MACROECONOMICS September 24, 2002. 1- Define supply and demand. Define surplus and shortage. In your opinion, is our market system in an equilibrium condition?. Why or why not?. Are you a consumer being satisfied in the market?. Why or why not?. Give examples to support your conc...
As politicians debate how to "spend the surpluses," renewed calls that monetary policy will need to be adjusted to fiscal policy changes represent a replay of monetary/fiscal policy mix framework that has led to macroeconomics policy mistakes in the pas and, if pursued, could again unhinge the foundations for sustained healthy economic expansion. ... Nothing in macroeconomics could be further from the truth, confirmed repeatedly through history. Moreover, the resurfacing of the fiscal/monetary policy mix framework draws the macroeconomics policy debate back into short-run stabilization consid...
