Balance of Payments Adjustment through Income Changes
An adjustment of the BOP through income changes can be illustrated by extending the principles embodied in the circular flow of income. Export receipts are included in the income stream and count (like investment) as an injection. Import payments (like saving) are a leak out of the flow for they contribute to the incomes of other countries.
KeywordsGovernment Expenditure Equilibrium Level Full Employment Income Stream Income Change
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