Balance of Payments 1

Economics S.S.S 3 Second Term

WEEK 1

Balance of Payments 1

Performance Objectives

Student should be able to:

1. Identify factors that give rise to payment into and out of the home country’s account.
2. Explain balance of payment concepts such as trade balance, current account balance and overall balance. 

Content

Term of trade and Measurement

Terms of trade may be defined as the rate at which a country’s exports exchange for its imports. Alternatively, Terms of trade is a measure of how much imports an economy can get for a unit of exported goods. For example, if an economy is only exporting apples and only importing oranges, then the terms of trade are simply the price of apples divided by the…