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Key Words Used in Balance of Payments

1. International Liquidity: This is the amount of money available for dealing with international economic transactions.

2. Balance of Trade: It is the relationship between the value of a country’s visible exports and visible imports within a given period of time usually a year.

3. Balance of Trade: Only gives information on visible exports and visible imports.

4. Balance of Payment: Is a record showing a country’s financial position with the rest  of the world for a particular period usually a year, i.e. a statement of account showing the relationship between a country’s total payments to other countries and its total receipts from them.

5. The component of balance of payment are:

a. Current account
b. Capital account
c. Monetary movement account

6. Balance of Payment Disequilibrium: Is a condition where the total receipts of a country is greater or smaller than payments to other countries.

7. Balance of Payment Adjustments: These are measures which the government deliberately initiated in order to correct a persistent balance of payments deficit.