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AU12 Chapter 4

TermDefinition
Balance of payments summary of a country's payments and receipts in a year
Balance of trade difference between imports vs exports
capital and financial account record of movement of funds with the rest of the world
credits payments received by other nations
debits payments to other nations
current account day to day financial transactions with other nations
current account defecit credits are less than debits
current account surplus credits are greater than debits
capital account capital transfers to foreign countries, capital brought by foreign migrants
financial account investments made with other countries, debt vs equity
reserve assets action by the RBA dealing with foreign currencies, plus IMF obligations
external policy government action to influence activity on current and capital accounts
fiscal policy government action to influence aggregate demand through tax and government spending
macroeconomic strategy measures taken by the government to influence consumption and investment
microeconomic strategy single decisions in the economy (operation of firms and households)
monetary policy RBA action to influence money supply through interest rates
direct investment create new assets and liabilities in a foreign country, a large influence over the operation
portfolio investment purchase of shares in a foreign company (less than 10%). financial returns prioritize business control
Equity finance company funds come from selling shares
foreign debt debt owed to other countries
gross foreign debt total borrowings of Australia from overseas
net foreign debt gross foreign debt – lending made by Australia
private foreign debt part of foreign debt owed by private residents
public foreign debt foreign debt owed by the government
foreign investment funds invested by the rest of the world
Foreign Investment Review Board (FIRB) federal body that examines foreign debt proposals
Created by: Jamiton
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