Lecture 09 page 1/2
https://netfiles.uiuc.edu/camara/econ103/fall08/lecture09.pdf
University of Illinois Oct/24/2008
Econ 103 – Macroeconomic Principles TA Odilon Camara
Read Chapters 16 and 17 (Book) and Reading 9 (Internet)
1. Introduction to International Trade (Chapter 16)
(We will see more about Chapter 16 later)
2. Balance of Payments (Chapter 17)
Example:
CREDIT DEBIT
Current Account Exports 100 Imports 130
(for transactions of goods and services) Tourism 10 Insurance 5
Shipping 3 Shipping 5
Unilateral Transfers 2 Interest 9
Dividends 6
115 155
Capital Account Direct Investment 10 Amortization 5
(for loans and transactions of assets) World Bank Loan 15 Direct Investment Abroad 2
IMF Loan 10
35 7
Current Account + Capital Account 150 162
Gold exports 10
Errors and omissions 2
162 162
In order to remember credit and debit concepts it is easier to think that
Credit represents inflow of money into the US from foreign countries.
Debit represents outflow of money from the US into foreign countries.
Note that some accounts may be in both the debit and the credit side, because there are inflows and
outflows related to that.
