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Understanding Balance of Payments and Economic Growth

The document outlines key components of an economy including the household sector, business sector, factor market, investment, government expenditures, and foreign sector. It also discusses monetary policies used to influence savings, investment, and economic growth through tools like interest rates, monetary supply measures, and reserve requirements. Government ensures resource allocation and stabilization across these sectors.

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kayla watanabe
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7 views1 page

Understanding Balance of Payments and Economic Growth

The document outlines key components of an economy including the household sector, business sector, factor market, investment, government expenditures, and foreign sector. It also discusses monetary policies used to influence savings, investment, and economic growth through tools like interest rates, monetary supply measures, and reserve requirements. Government ensures resource allocation and stabilization across these sectors.

Uploaded by

kayla watanabe
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Expenses

PRODUCT MARKET
Goods &
Services Revenue

HOUSEHOLD BUSINESS EXPORT INJECTIONS:


SECTOR SECTOR - Investment
FACTOR MARKET
- Export
Land, Labor, Capital, Expenditures
- Govt Expenditures
Factor INVESTMENT GOVERNMENT
Income EXPENDITURES

CAPITAL GOVERNMENT FOREIGN


MARKET SECTOR SECTOR
Y=C Governed by Financial
SAVINGS TO ENSURE
Y = C + SAVINGS Ensures:
System: ECONOMIC GROWTH
S = Investment
1.) BSP – Through - Resource Allocation
Monetary Board - Resource
2.) BANKING INS. Distribution
MONETARY POLICIES 3.) NON-BANKING INS.
- Stabilization
- Interest Rates - ↑Savings ↑Interest ↓Investment SAVINGS:
IMPORT
PDY = Income - Tax - Savings
MONETARY SUPPLY – M1 = Notes & coins - Taxes
M2 = M1 + Broad money - Imports
M3 = M2 + Broad liabilities
M4 = M3 + Foreign currency
> Reserve Requirement – Portion of bank inflows that should be retained
FOREIGN MARKET
> Rediscounting
> Open Market Operations – Government securities are bought and sold
Balance of Payment (Inflow = Outflow)
> Moral (succession) – Encourage banking system in order to support/achieve - Current Account: export/import
goals - Financial Account: money market, etc.
> Direct Control
- Capital Account: assets

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