Economics explained
Category:
Balance of payments
Causes of a current account surplus
The secret to scoring awesome grades in economics is to have corresponding awesome notes.
A common pitfall for students is to lose themselves in a sea of notes: personal notes, teacher notes, online notes textbooks, etc... This happens when one has too many sources to revise from! Why not solve this problem by having one reliable source of notes? This is where we can help.
What makes TooLazyToStudy notes different?
Our notes:
-
are clear and concise and relevant
-
is set in an engaging template to facilitate memorisation
-
cover all the important topics in the O level, AS level and A level syllabus
-
are editable, feel free to make additions or to rephrase sentences in your own words!
Looking for live explanations of these notes? Enrol now for FREE tuition!
If inflows of money (from the sale of exports, etc.) exceed outflows of money (from the purchase of imports, etc.) there is a current account surplus. This means the country will have a positive balance on its current account.
Causes of a current account surplus
A surplus on the current account can occur due to a combination of two factors:
Higher demand for exports
This could be caused by
an improvement in competitiveness
higher incomes in overseas markets- foreign buyers have more money to spend on the country's exports
a lower exchange rate which makes exports less expensive for foreign buyers
Reduced demand for imports
This could be caused by a lower exchange rate which makes it more expensive to buy imports inflation in overseas countries causes imports to be more expensive