BALANCE OF PAYMENTS (B.O.P)
CONTENT
- Introduction to Balance of Payments (B.O.P)
- Roles of Money in International Trade
- Terms of Trade
- Balance of Trade
- Balance of Payments
- Commercial Policy in International Trade
- Tariff or Restriction on Trade
- Exchange Rates
- Devaluation
Introduction to Balance of Payments (B.O.P)
International trade is trade between two or more countries. Foreign trade is made possible as a result of international specialization. Money plays prominent roles in international trade.
Roles of Money in International Trade
- It is a medium of exchange of commodities in international trade: – The exchange of goods and services among the residents and governments of various countries across international boundaries is done by money
- In international trade, trade credits are sometimes given and payments are made later.
- Surplus foreign exchange from international trade is kept as reserves in the form of gold or international currency such as dollar.
- It serves as unit of account because balance of trade and payment accounts are recorded in monetary terms.
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