• We are pleased to announce that the winner of our Feedback Prize Draw for the Winter 2024-25 session and winning £150 of gift vouchers is Zhao Liang Tay. Congratulations to Zhao Liang. If you fancy winning £150 worth of gift vouchers (from a major UK store) for the Summer 2025 exam sitting for just a few minutes of your time throughout the session, please see our website at https://www.acted.co.uk/further-info.html?pat=feedback#feedback-prize for more information on how you can make sure your name is included in the draw at the end of the session.
  • Please be advised that the SP1, SP5 and SP7 X1 deadline is the 14th July and not the 17th June as first stated. Please accept out apologies for any confusion caused.

Balance of Payments

B

Benjamin

Member
Could you please clarify the breakdown of the BoP accounts with regards to Revision booklet 4, multiple choice question 36?

The question asks what shouldn't be in the current account.

The CMP includes migrant remittances in the capital account (chapter 16, section 1.3, page 6), which was the basis for my answer A. The solutions show the answer as D - the purchase of foreign shares by a domestic pension fund, which I agree should be financial account flow though unclear on why A is not a correct answer.

Thanks in advance!
 
Hi,

The capital account includes money brought into the country by migrants. This is the money / savings brought into a country by immigrants when they (permanently) move into a country. (Equally, the money moved out of the country when people emigrate would be recorded here as a negative entry.)

In contrast, migrant remittances refers to the transfer of money by workers who are currently (and temporarily) working abroad. So, if the father of a UK family is currently working on a project in the US and sends some money home each month, that is included (as a positive entry) within the net income flows from abroad item within the current account.

Presumably, distinguishing between the two may sometimes be difficult in practice. However, it should be clear in the exam, which is meant. :)
 
You must log in or register to reply here.
Back
Top