Types of business transactions dominate the balance of payments

Two types of business transactions dominate the balance of payments:

  • Exchange of Real Assets: The exchange of goods (for example: automobiles, computers, watches, textiles) and services (for example: banking services, consulting services, travel services) for other goods and services (barter) or for money.
  • Exchange of Financial Assets: The exchange of financial claims (for example: stocks, bonds. Loans, purchase or sales companies) for other financial claims or money.

Although assets can be identified as real or financial, it is often easier to think of all assets simply as goods that can be bought and sold. The purchase of a hand-woven area rug in a shop in Bangkok by a U.S. tourist is not all that different from Wall Street banker buying a British government bond for investment purposes.

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