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Balance of Payments – An Example
Let’s start by dividing the table into three sections.
The Current Account (top section) deals with transactions of goods, services, payments for services, and gifts.
The Capital Account (middle section) deals with financial flows – purchases and sales of assets such as bonds, loans, business firms, corporate stock, and currency.
The total of the Current Account MUST EQUAL the total Capital Account: the is the Balance of Payments.
The Memoranda (bottom section) provides several different summaries or “balances” of different items from the top. Nothing new is presented in memoranda.