Economics
5th Edition
ISBN: 9781319066604
Author: Paul Krugman, Robin Wells
Publisher: Worth Publishers
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Question
Chapter 33, Problem 2P
To determine
Balance of Payment (BOP):
It is an account of what is received by resident of a country from the rest of the world and what these residents have paid out to other countries on account of sale of goods, services and other invisible items as well as on account of capital transfers from the other countries. It is divided into two accounts.
Net Capital Outflow: It means that the amount of investment or the assets owned by domestic country in other country is less than the investment or the assets owned by other country in the domestic country. If the foreign interest rate is more than the domestic interest rate then there is outflow of capital and vice versa.
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