Copy and Edit

Balance of Payments

Description

Mind Map on Balance of Payments, created by 17Y6C32 KOH HUI WEN on 11/12/2017.
17Y6C32 KOH HUI WEN
Mind Map by 17Y6C32 KOH HUI WEN, updated more than 1 year ago
17Y6C32 KOH HUI WEN
Created by 17Y6C32 KOH HUI WEN about 7 years ago
43
0
0
1 2 3 4 5 (0)

Resource summary

Balance of Payments
  1. BOP Surplus
    1. caused by...
      1. Current Account Surplus
        1. ↑ (X-M)
          1. ↑ AD
            1. trigger multiplier effect
              1. multiplied rounds of ↑ AD and ↑ RNY
                1. ↑ AD near full employment
                  1. DD-pull inflation
                  2. ↑ AD over Keynesian range
                    1. ↑ EG (actual growth)
                      1. Attract FDI
                      2. ↑ Employment
                2. ↑ DD for domestic currency
                  1. Exchange Rate Appreciation
                    1. M become relatively cheaper
                      1. ↓ Imported inflation
                        1. ↓ Cost of new technology
                          1. ↑ M of capital goods
                            1. ↑ Productivity, move up value chain
                              1. ↑ AS
                                1. ↑ EG (potential growth)
                          2. ↑ Profits when repatriated back to home country
                            1. ↑ Expected Rate of Return
                    2. Capital and Financial Account Surplus
                      1. ↑ FDI
                        1. Undesirable restructuring
                          1. Economy had not shifted to higher VA yet
                            1. Workers lack required skills to work in booming industry
                              1. ↑ Structural UnN
                          2. ↑ DD for domestic currency
                            1. Exchange Rate Appreciation
                              1. X become relatively more expensive in foreign currency/ M become relatively cheaper in domestic currency
                                1. ↓ X / Consumers switch from domestic G&S to M so Cd ↓
                                  1. ↓ AD, trigger reverse multiplier
                                    1. multiplied rounds of ↓ AD and ↓ RNY
                                      1. ↓ Employment
                                        1. ↓ EG (actual growth)
                                  2. ↓ Imported inflation
                                2. ↑ I
                                  1. ↑ AD
                                    1. trigger multiplier effect
                                      1. multiplied rounds of ↑ AD and ↑ RNY
                                        1. ↑ Employment
                                          1. ↑ EG (actual growth)
                                      2. ↑ Capital accumulation
                                        1. ↓ Unit cost of production
                                          1. ↑ SRAS
                                          2. ↑ Productive capacity
                                            1. ↑ LRAS
                                              1. ↑ EG (potential growth)
                                  2. Deficit somewhere else
                                    1. If deficit is persistent, risk BOP crisis
                                      1. ↑ Protectionism
                                        1. ↓ Trade
                                  3. BOP Deficit
                                    1. caused by...
                                      1. Current Account Deficit
                                        1. ↓ (X-M)
                                          1. ↓ AD
                                            1. trigger reverse multiplier effect
                                              1. multiplied rounds of ↓ AD and ↓ RNY
                                                1. ↓ AD over Keynesian range
                                                  1. ↓ EG (actual growth)
                                                    1. ↓ Employment
                                                    2. ↓ AD near full employment
                                                      1. ↓ DD-pull inflation
                                              2. M of capital goods
                                                1. ↑ Capital accumulation
                                                  1. ↑ Productivity
                                                    1. ↑ I
                                                      1. ↑ AS
                                                        1. ↑ EG (potential growth)
                                                        2. ↑ AD
                                                          1. trigger multiplier effect
                                                            1. multiplied rounds of ↑ AD and ↑ RNY
                                                              1. ↑ EG (actual growth)
                                                                1. ↑ Employment
                                                          2. ↓ Unit cost of production/ ↑ Productive capacity
                                                            1. ↑ AS
                                                              1. ↑ EG (potential growth)
                                                    2. Capital and Financial Account Deficit
                                                      1. ↑ DIA
                                                        1. ↑ Future Y inflows from abroad
                                                          1. ↑ Purchasing power
                                                            1. ↑ C
                                                              1. ↑ AD
                                                            2. Improve Current Account in the future
                                                              1. Improve BOP
                                                          2. ↓ FDI
                                                            1. ↓ I
                                                              1. ↓ AD
                                                                1. trigger reverse multiplier effect
                                                                  1. multiplied rounds of ↓ AD and ↓ RNY
                                                                    1. ↓ EG (actual growth)
                                                                      1. ↓ Employment
                                                                  2. ↓ Rate of capital accumulation
                                                                    1. AS ↑ at a slower rate
                                                                      1. ↓ Potential growth
                                                                  3. ↓ DD for domestic currency
                                                                    1. Exchange Rate Depreciation
                                                                      1. X become relatively cheaper in foreign currency/ M become relatively more expensive in domestic currency
                                                                        1. ↑ X / Consumers switch from M to domestic G&S so Cd ↑
                                                                          1. ↑ AD, trigger multiplier effect
                                                                            1. multiplied rounds of ↑ AD and ↑ RNY
                                                                              1. ↑ Employment
                                                                                1. ↑ EG (actual growth)
                                                                          2. ↑ Imported inflation
                                                                  4. Depletion of foreign reserves
                                                                    1. Borrowings, ↑ Foreign debt burden
                                                                      1. ↑ Interest payment
                                                                        1. ↑ Opportunity cost, ↓ M in the future
                                                                          1. ↓ Material SOL
                                                                        2. Need to sell domestic currency to pay back debt
                                                                          1. Devaluation/ Expected Devaluation
                                                                            1. Massive hot money outflows
                                                                              1. BOP further worsens
                                                                        3. ↓ Ability to ER intervention
                                                                          1. ↑ Vulnerability to speculative attacks
                                                                            1. BOP Crisis

                                                                      Media attachments

                                                                      Show full summary Hide full summary

                                                                      0 comments

                                                                      There are no comments, be the first and leave one below:

                                                                      Want to create your own Mind Maps for free with GoConqr? Learn more.

                                                                      Similar

                                                                      GLOBALISATION NOTES
                                                                      Timothy Wan
                                                                      Economic Performance - Year 10 Economics and Business
                                                                      Cath Smeeteon
                                                                      BOP
                                                                      Anthony Siciliano
                                                                      Key Events, People and Terms of the French Revolution
                                                                      poppwalton
                                                                      The English Language Techniques
                                                                      craycrayley
                                                                      Lord of the Flies Quotes
                                                                      Emma Payne
                                                                      CHARACTERS IN OF MICE AND MEN
                                                                      jessicasusanevans
                                                                      GCSE AQA Biology 1 Quiz
                                                                      Lilac Potato
                                                                      Compensation and Benefits PHR Study Guide
                                                                      Cari Hawthorne
                                                                      Organic Nomenclature
                                                                      mahnoor.gohar
                                                                      Browse Library