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AU12 Chapter 4
| Term | Definition |
|---|---|
| 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 |