Macroeconomics › Section J · International trade and capital flows › Topic J.3
Trade balances and flows of financial capital
Every import has to be paid for, and every export earns something. Follow the payments and a trade deficit turns out to be the same thing, seen from the other side, as borrowing from abroad.
In this topic
- Two sides of every transaction
- A story of two villages
- What the story teaches
- The balance of payments
- Why the accounts must match
- Worked example: tracing one import
- Worked example: financing a deficit
- Flows and the stock of foreign assets
- Not just governments
- Common mistakes to avoid
- Key takeaways
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