I've come full circle - you helped me get my Alevel Economics over 7 years ago, and now i'm back watching for quick recaps to prepare for the CFA. Still as useful as it was 7 years ago - thank you!
+EconplusDal Very helpful video...thanks. However, I have a similar question to some of the previous posters. I understand that if Country A has a current account deficit and its trading partner takes their surplus and invests in Country A, everything balances out. But, why does this have to happen? What if the surplus country just holds the Country A currency in reserve? How does that balance? Why does the money have to flow back to Country A?
i just discovered this channel and i have to say that watching econ plus dal is the best investment for my future that i have ever made . its causing me to have a huge knowledge account surplus .
I tried to learn this concept through various internet sources many times in the past, but this is the first time I understand how and why the accounts sum to zero. What a simple but amazing teacher! Sir, your voice is also too soothing.....it takes away all the anxiety!
I went back to school to get a MSc. in Management and have this class now and my professor simply blew my mind on this subject. Well this really helped. Your students are very lucky. I finally understand it.
I have a test on Wednesday about this amongst with other chapters... my book confused me SO much but with this video, I feel super prepared for my test now finally understanding the BoP!!!
This is the best RUclips Channel for A level Econ students- I used the videos along with self study and got an A* with the CIE A level Board !Highly recommend it!
you are awesome , i have an exam after two days and I looked at different websites and books but nothing explained those lessons better or clearer than you . Thank you
great video dal , a good way I used to remember the components of the current account was using an acronym of the first letters of the 4 components . So T for trade in goods , T for trade in services , I for investment income and T for transfers . Hope this helped !
Hi, I would like to know, if a country like China runs a Current Account surplus, and deceided not to spend its USD and has a positive reserve, then wouldn't the Current account and financial account not balanced out? So all those trade surplus would end up balanced through Errors and Omissions? Thank you in advance.
whats the difference between income on the current account and the capital account then? Wouldn't it make more sense to include income on the capital account instead?
Hey great video, I have a question if you don't mind If in your example China's FA deficit is a result of high levels of FDI into the USA, will the profits from that FDI be counted as "investment income" on the current account? If so, is this a way of achieving export-based economic growth?
In the USA's BoP Accounts, Chinese-interest company profits must be registered as an outflow in the primary income account, even if no money leaves the USA (e.g. even if all profit is re-invested in the USA)! These foreign owned businesses contribute positively to the Current Account Balance if they are exporting goods and services (since sales=exports > profits, they do incur costs). If, however, these businesses sell to locals rather than abroad, they have a negative impact on the current account via the primary income outflows (the profits that must go to the Chinese-owners). Despite worsening the current account deficit, the truth is that they increase competitiveness in the US and lower prices for US consumers, while also creating jobs for Americans.
Assume the following represents the sum total of all international transactions for a given year. 1)$100 worth of oil was imported and paid for with a demand deposit. 2)$100 worth of autos were imported and paid for with a demand deposit. 3)$100 worth of wheat was exported and paid for with a demand deposit. 4)$100 in interest payments were made to a foreign bank with a demand deposit. 5)$100 in food aid was given to the rest of the world in the form of a demand deposit. 6)A domestic bank purchased a foreign demand deposit from a foreign bank with a $100 demand deposit. 7)A foreign multinational firm purchased a factory for $100 in the domestic economy for $100 and paid with a demand deposit. 8)$100 worth of long-term Treasury bonds were sold to foreign investors and paid for with a demand deposit. 9)The treasury sold $100 worth of foreign exchange (official reserves) to a foreign central bank for a demand deposit. Which statement is concerning the above transactions is TRUE? The balance on the official settlements account is -$100. The balance on the long-term capital account is -$200.The balance on net foreign transfers is +$100. The balance on the current account is -$300The balance on the merchandise trade account is +$100.
Hi Econplus， thanks for the vedio. I have a question, for the portfolio investment of Hong kong balance sheet, if the non-resident invest the stock of H shares, should this amount be put as credit in hong kong's balance sheet? or because the H shares are companies operated in mainland, so hongkong's balance sheet has nothing to do this H shares investment?thanks.
What's the "official" definition for BoP? Also, I'm really confused by the 'balancing tool'- surely even if the balancing tool is there, it doesn't just make debts/deficits dissapear? Your videos are really helpful, there is hope for me in this exam afterall! Thank you!
"The balance of payments is a statistical statement that summarizes transactions between residents and nonresidents during a period". This is the official definition published in the Balance of payments and international investment position manual (6th edition). Not sure if you need this information 5 years later though :)
Why the balance of payment "has to be balanced"? Why would other countries (China) invest or buy bond of a country (US) with Current Account deficit? I would like to attempt to explain the situation: First of all, it is not like you first have a Current Account deficit, THEN you will have Financial Account surplus. Consider Financial Account being your bank account, and Current Account being your transaction of buying and selling. When you want to purchase more than you sell, but you don't have enough money, so you borrow money from other country (China) by issuing bonds to them. Then you have more cash (Financial Account surplus), to purchase more than you sell (Current Account deficit) = Balance of payment.
+Gao Xiao Hao Thanks! So do the bond payments (i.e. the UK paying back the lenders) count towards the current account deficit (as it is a transfer of money rather than the acquirement of financial assets)?
can direct investment abroad be registered as a positive number in the financial account? I saw it in one of the real balance of payments sheet, but it does not make sense , because money leaves the country, so does it not have to be a negative number always?
I was sitting at a tutorial last week getting strangely looked at by the class and tutor, because they keep saying the BOP balances, because of a double entry system. That when you record a credit, some debit needs to immediatly balance out the BOP of one individual country. It even says this in the textbook and we get exercises by this which absolutely make zero sense to me. I suspected it balanced out, because countries don't want money flowing out of their country when importing too much and China for instance doesn't want to have too much inflation due to money flowing in. So China invests in the US for this to not happen. So can I get a comfirmation on this, because it is driving me crazy...
i can't just figure out one thing. for example if i buy shares of a local company in my country, will the amount i spent for this operation be included in portfolio investments? and with which sign? i need to find a correlation between portfolio investment (in US $) and potential demand for stock broking companies services. in my dissertation i need to claim that countries with positive portfolio investment are better for making brokerage business. is this true? help me please :(
As discussed in the lecture, is Chine going to invest in the countries like the USA where there is a current account deficit? Why a country may invest in a country like the USA?
What if the two countries are China and an LDC which does not offer great investment prospects? Then China may invest in another country, so how does it balance out; What's to stop China from investing in a country that already has a FA surplus?
I think you should clearly explain that according to the theory, the current account should be equal to the financial plus capital account. THis could have been done by putting a plus sign inthe middle
+EconPlusDal So if there is a large CA deficit, there must be a large FA surplus. My question is, why would foreigners want to invest in a country with a structural CA deficit (therefore there won't be a FA surplus?)
+Hugo Vogt I am unsure of the meaning of your question, are you asking why China would want the FA deficit by buying the USA's bonds when it is sitting on cash that it would then lose?
I've come full circle - you helped me get my Alevel Economics over 7 years ago, and now i'm back watching for quick recaps to prepare for the CFA. Still as useful as it was 7 years ago - thank you!
Are we all living the exact same lives?
You are honestly the best Econ help channel on RUclips. Amazing of you to make these videos for free and help all of us out! Thank you so much
t adawi it was on 69 likes so I didn’t want to like it bcos then it wouldn’t be 69 anymore but I agree
can't agree more!!
Balance of payment was a real problem for me and after seeing this video i have a good knowledge of BOP. Thanks a lot... very well explained !!!
+Ankit Kishore Very happy I could help Ankit, thanks for watching!
+EconplusDal Very helpful video...thanks. However, I have a similar question to some of the previous posters. I understand that if Country A has a current account deficit and its trading partner takes their surplus and invests in Country A, everything balances out. But, why does this have to happen? What if the surplus country just holds the Country A currency in reserve? How does that balance? Why does the money have to flow back to Country A?
what if country A invest in its own country ? or reduce taxes?
i just discovered this channel and i have to say that watching econ plus dal is the best investment for my future that i have ever made . its causing me to have a huge knowledge account surplus .
I tried to learn this concept through various internet sources many times in the past, but this is the first time I understand how and why the accounts sum to zero. What a simple but amazing teacher! Sir, your voice is also too soothing.....it takes away all the anxiety!
I went back to school to get a MSc. in Management and have this class now and my professor simply blew my mind on this subject. Well this really helped. Your students are very lucky. I finally understand it.
I have a test on Wednesday about this amongst with other chapters... my book confused me SO much but with this video, I feel super prepared for my test now finally understanding the BoP!!!
This is the best RUclips Channel for A level Econ students- I used the videos along with self study and got an A* with the CIE A level Board !Highly recommend it!
How are you now? Any tips for acing as and a level?
I have my econ exam 6 Hours from now. You're a life saver man!!!
IB Paper 2 tomorrow. You're a lifesaver.
IB Paper 2 in 2:30h . He really is.
you are awesome , i have an exam after two days and I looked at different websites and books but nothing explained those lessons better or clearer than you . Thank you
BY FAR the best video I've seen on the subject. You got a subscriber
Superb explanation. Your energy shows that you are in control of your subject.
POV your watching the entire alevel course in one day before paper 2 tomorrow
How did it go? What grade did you get?
Man.. you are a helper.. had no clue .. was stuck.. and I have an exam tomorrow and now I feel ready.. why didn't I discover your channel earlier .😫
OMDS you are the only person that explains this to me properly, finally understood the BoP!!
You are an absolute champ brother. I have a presentation tomorrow. Thanks for what u are doing, keep it up.
We need more people like you. Great video. Thanks!!!!
Thank You ❤️❤️ got a headache before watching this. You've made it simpler.🙏
You are the best Econ channel, Thank you so much for your help.
Best video on this topic so far on RUclips))
you teach me a very valuable lesson! wish you all the best😘
great video dal , a good way I used to remember the components of the current account was using an acronym of the first letters of the 4 components . So T for trade in goods , T for trade in services , I for investment income and T for transfers . Hope this helped !
Best explanation at all I've ever listened.
Vikstar is a good economic teacher
Best explanation I've seen so far. Thank you.
Thank you. Very well explained. You are an excellent teacher.
I really need to thank you. Your videos are simply amazing. They have helped me understand some important topics of economics. Keep up the good work!
Very clear, I would like to use it for my students if I can.
Absolutely brilliant sir
Thank you so much, have a test tomorrow, thought I was screwed, until I clicked this
Simply explained. Thank you very much!
this mans saved my a levels
Great video daddy dal
sigma sigma on the wall whos the skibiddiest of them all?
@@ankush6672 shush bud
@@harry4701 begged it
Nothing to add, absolutely brilliant!
Im 12,thanks for helping me bro ur the reason i have the willpower to study economics everyfay
Are you learning this in school or in your free time
Best explanation.
In this much detail is A2 right? In As AQA, the bop just includes trade?
Perfect explanation, thank you!
gotta love econplusdal
i love you econplusdal
Explained it better than my teacher
Perfectly explained!!! Thank you
Great explanation by the way. Thumb up-ed.
great video really helped, keep up the good work
Hi. Very good video. But I would like to know what constitutes investment income in the current account?
Cool explanation! Thanks! 👍
Great video, really cleared everything up
Yr1 end of year exam tomorrow. Thank you for help.
Yr1? School's getting difficult damn!
thursday lets goo
any predictions?
Hi, I would like to know, if a country like China runs a Current Account surplus, and deceided not to spend its USD and has a positive reserve, then wouldn't the Current account and financial account not balanced out? So all those trade surplus would end up balanced through Errors and Omissions?
Thank you in advance.
Excellent summary !
whats the difference between income on the current account and the capital account then? Wouldn't it make more sense to include income on the capital account instead?
Extremely helpful video.
Dal The Man!!!
Great video, thanks for all the help!
I agree!
very good explanation dude... thanx
Very well explained. Thanks alot! Keep up!
Fun yeh ma dude
Hey great video, I have a question if you don't mind
If in your example China's FA deficit is a result of high levels of FDI into the USA, will the profits from that FDI be counted as "investment income" on the current account? If so, is this a way of achieving export-based economic growth?
In the USA's BoP Accounts, Chinese-interest company profits must be registered as an outflow in the primary income account, even if no money leaves the USA (e.g. even if all profit is re-invested in the USA)! These foreign owned businesses contribute positively to the Current Account Balance if they are exporting goods and services (since sales=exports > profits, they do incur costs). If, however, these businesses sell to locals rather than abroad, they have a negative impact on the current account via the primary income outflows (the profits that must go to the Chinese-owners). Despite worsening the current account deficit, the truth is that they increase competitiveness in the US and lower prices for US consumers, while also creating jobs for Americans.
This is amazing!! Thanks a lot!!
108k views, my g has made it.
A country has BOP position that
indicates a huge net surplus of foreign portfolio investments. What policy recommendations would you make?
Thanks Vikk
under what component of the balance of payment do we record loan repayment
This video is amazing wow
Assume the following represents the sum total of all international transactions for a given year.
1)$100 worth of oil was imported and paid for with a demand deposit.
2)$100 worth of autos were imported and paid for with a demand deposit.
3)$100 worth of wheat was exported and paid for with a demand deposit.
4)$100 in interest payments were made to a foreign bank with a demand deposit.
5)$100 in food aid was given to the rest of the world in the form of a demand deposit.
6)A domestic bank purchased a foreign demand deposit from a foreign bank with a $100 demand deposit.
7)A foreign multinational firm purchased a factory for $100 in the domestic economy for $100 and paid with a demand deposit.
8)$100 worth of long-term Treasury bonds were sold to foreign investors and paid for with a demand deposit.
9)The treasury sold $100 worth of foreign exchange (official reserves) to a foreign central bank for a demand deposit.
Which statement is concerning the above transactions is TRUE? The balance on the official settlements account is -$100.
The balance on the long-term capital account is -$200.The balance on net foreign transfers is +$100.
The balance on the current account is -$300The balance on the merchandise trade account is +$100.
Hi Econplus， thanks for the vedio. I have a question, for the portfolio investment of Hong kong balance sheet, if the non-resident invest the stock of H shares, should this amount be put as credit in hong kong's balance sheet? or because the H shares are companies operated in mainland, so hongkong's balance sheet has nothing to do this H shares investment?thanks.
What's the "official" definition for BoP? Also, I'm really confused by the 'balancing tool'- surely even if the balancing tool is there, it doesn't just make debts/deficits dissapear?
Your videos are really helpful, there is hope for me in this exam afterall! Thank you!
"The balance of payments is a statistical statement that summarizes transactions between residents
and nonresidents during a period". This is the official definition published in the Balance of payments and international investment position manual (6th edition). Not sure if you need this information 5 years later though :)
Thanks a lot, I understand the reason why CA and CFA are opposed :D
If you were just a guy looking for a solid intro to economics and its basic ideas etc would this be the right place to start?
9:00 What would happen if China didn't buy US government bonds. They just kept their surplus money???
AHAHHH i LOVE YOUR VIDEO! THANKS!
Why the balance of payment "has to be balanced"? Why would other countries (China) invest or buy bond of a country (US) with Current Account deficit? I would like to attempt to explain the situation:
First of all, it is not like you first have a Current Account deficit, THEN you will have Financial Account surplus. Consider Financial Account being your bank account, and Current Account being your transaction of buying and selling.
When you want to purchase more than you sell, but you don't have enough money, so you borrow money from other country (China) by issuing bonds to them. Then you have more cash (Financial Account surplus), to purchase more than you sell (Current Account deficit) = Balance of payment.
+Gao Xiao Hao Thanks!
So do the bond payments (i.e. the UK paying back the lenders) count towards the current account deficit (as it is a transfer of money rather than the acquirement of financial assets)?
Thanks for the video very helpful
can direct investment abroad be registered as a positive number in the financial account? I saw it in one of the real balance of payments sheet, but it does not make sense , because money leaves the country, so does it not have to be a negative number always?
I was sitting at a tutorial last week getting strangely looked at by the class and tutor, because they keep saying the BOP balances, because of a double entry system. That when you record a credit, some debit needs to immediatly balance out the BOP of one individual country. It even says this in the textbook and we get exercises by this which absolutely make zero sense to me.
I suspected it balanced out, because countries don't want money flowing out of their country when importing too much and China for instance doesn't want to have too much inflation due to money flowing in. So China invests in the US for this to not happen.
So can I get a comfirmation on this, because it is driving me crazy...
I love you!
NO HOMO
you are the best!!
very clearly explain...
i can't just figure out one thing. for example if i buy shares of a local company in my country, will the amount i spent for this operation be included in portfolio investments? and with which sign? i need to find a correlation between portfolio investment (in US $) and potential demand for stock broking companies services. in my dissertation i need to claim that countries with positive portfolio investment are better for making brokerage business. is this true? help me please :(
Nice video, thank you.
Hero #econplusdalailama
Is there any way of getting live capital flow data of a country like currency FX??
Is there a way of actually looking at the account data?
Thank you, very helpful!
sir i want to know that have you made any video of is lm topic and other topics for economics hns.?
thank you very much, very useful
As discussed in the lecture, is Chine going to invest in the countries like the USA where there is a current account deficit? Why a country may invest in a country like the USA?
What if the two countries are China and an LDC which does not offer great investment prospects? Then China may invest in another country, so how does it balance out; What's to stop China from investing in a country that already has a FA surplus?
You sir are amazing
vikkstars second channel
I think you should clearly explain that according to the theory, the current account should be equal to the financial plus capital account. THis could have been done by putting a plus sign inthe middle
All hail St Dal
I learn it as the foreign reserve, and the capital account.
Thank you dal
you legend Dal
i thought reserves are reserved money from banks, that do not get transferred, and only stay internal to the bank?
how central Bank reserve impact on inflow or outflow??? please reply my brother!!
+EconPlusDal So if there is a large CA deficit, there must be a large FA surplus.
My question is, why would foreigners want to invest in a country with a structural CA deficit (therefore there won't be a FA surplus?)
+Hugo Vogt I am unsure of the meaning of your question, are you asking why China would want the FA deficit by buying the USA's bonds when it is sitting on cash that it would then lose?
Why would China lose the profits made by selling their exports? (i.e. the CA surplus)?
+Hugo Vogt They don't lose the profits..
+Alex Hooker "...when it is sitting on cash that it would then lose?" (apologies, I must have interpreted your comment incorrectly)
+Hugo Vogt They physically lose the cash, but they don't lose the profits as they buy US bonds with it.
Hi! how are you? I have a couple of question on Balance of Payments. is it possible if you can help me with that