Page 31 - FINAL CFA SLIDES DECEMBER 2018 DAY 6
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Session Unit 5:
19. Int. Trade & capital Flows, p136
LOS 19.i: Explain how decisions by consumers, firms, and governments affect the balance of
payments, p.147
Current account deficit
and needs to be funded from foreign capital inflows
otherwise BOP is strained!!
All Trade Deficit Bad? Depends on what the net liability was used to fund:
• If used to finance high current C (low S), no increase to future productive power –BAD!
• If used for domestic capital investment, increase in future productive power –Good!
