International Trade :

BOP Financial + Net Error Somission

= CA +
Capital + =
O

A BOT + BOIT + NetIncome Cent

current +
Transfer = C A .
.

Financial Alc Investment + Reserves FA

lanforgiven
: + SDR IMF + = .

Movement in the
Capital Ac :

fixed Assess.
Net Error Errors
& Omission : missions
during the year :

Effects of Fiscal , Monstan &,

Supply Side Policies on BOPAC
.

P
Fiscal
/Monetary >
-

Expensionary
2
A4 - RGD4-RNI4

Import = MMX DN

↑
GDP4 Exports
-

RGDPD
>
-
Contractionary -
ADD + >
- RN1

sendition ↳ Mmx ANI

↑
=
X/ dampening Expenditi
or
Importa =

Reducing Policy GDPL

Exports
>
-

supply Side Policien :

&R -
>
-
Imports may
.
rise

Tolproduce more , need more

var mater e g oil Cal

.
.

, ,
Gas .
ets

L R MXAN
. . -
Exports 4 >
 Expendition Dampening/Reducing AD
Import
>
-

Exchange
Vate Policy ·:
Revaluation/Devaluation
Frade Barriers :

Exchange Rate
Floating ER -
D = S

↳
Exports USA
USD ER Appreci
-

↳
Importa o USA-

US DYER Deprecic
a

Purchasing Power Parity ER :

Pah

USA
McDon 1200 200 A Pak Incon
Income
$1000/$5
$1000
/$4
9
-

.
=

5 =
169

232 56
.

.
5

Cost
of Basking Good A
PPPER =

Cost- Good
Bashe-of
B
y ,

Trade
Weighen ER :
Pak-USA 50
%
PKR
45 %

Pak-Japa
lo %
450 %

Pak with &

Frad USA
Japan .

weigen-
Volun ER %1. ER XX

USA 90
% + 10 % 900

Japa o% + 50%

TWER =E
WXYDER
E W
MY
 Manage ER :
Pak USA

O
.

Export
on
·

supply y usI on
&

Import D
$) 2000 - -

Supply $2000 -
DR
-

-
Db S4

Exports
-
>
Import
- >
$ , S4
Imports >
Exports -

Managed ER SI
S
-
$20m
S2 300m
↑
S3
PKR/$ F Su
⑳ El =
2 Su

205 & &↑

E Max -

200 es A
195 O Et Min .

EY SRO
No *

D
S
O I
270 290300310 330 US$

$20m $20

Central Bank Central Back

Sell US$ Buy US$
in the market.
from open market
Dirty Floating
- Floating
Dirty .
 Go .

4 ER >
- Revaluation
Value 4
Market
D$445$ -
Appreciate
Govt b ER >
- Devaluation
Market value to
D$b3S$4 -
Depreciation
Effects of Devaluation/Depreciation &
Revaluation/Appreciation on BOT AD PPC ets
, ,
.

Marshal learner Condition S P /C ED

SR (PEDX + PEDMC1)

Exchange Rate Appreciate >

-
Exports Price 4 -
Export Revenu ↑
] B
Import
Price b >
-
Import Expendit
PEDX+ PEDM > 1)
(Long Rem
F Reven to
:

$1
xport 47 Botto i

PEDEM PADAPEDMun
-

BOT
Import Expendic
the I
-

S
S R
&

R L
Time
.
-

Ve
Inverse J-Curve
-

(S .
R . PEDX + PEDM < 1)

Bo
Pb
Exchange Rate preciate
Exports Export
Revenuets
↑]
>
- &
BOTH
Import P4 >
-
Import Expen ADt

I-curve . (L . R .
PEDX + PEDM71)
Reme 4
Export BOTH
Expeditib]
>
-

S - R L . R
Import ADI

O
PED X + PEDM/
& Time

PFDEM2
E

-ve
.
 DI
Ham
Development Index
I litracy .

RED
PPPER
per Capita
.
Expecteny .

Read Write

local
&
language
Basic Calculation

Measure
of Economic Welfar (MEW)
MEW RGDP Leisure-
=

+ Value unpaid + Externaliti + Value

of
percapita
a
Work
PPER

Multidimentional Poverty Index : (MPD

↳ Absolute Porety >

-
$2/-In the
↳ Relative
Poverty -> lower than the
Average
the
Society .
↳ Freedom of Speach.
↳ Justice etc .

Curm
Kunes
h Book
Income
&

inequally

O Economic
Growth Vali
 Policies to Correct BOP Dis-Equilibrium :

BOP AK

~
Balance Current Ac
of
XXX

-
Balance
of Capital Alc XXX

~
Balance Financial Al
of XXX

-
Net Error & Omission XXX
-

O
-

Current A
BOT (Merchandise XXX

BOIT (Services) XXX

Income
Primary XXX $100

Income
Secondary X XX

BOCA .
XXX A

Financial Al
Investments XXX $1000 -
10 %

Reserves XXX 2

Special Drawing Rights (IMF) XXX

loan
forgirnen XXX

etc
XX B

Capital AKC
movement in
fixed Assets .

-
XXX C

NE & O XXX

A + B + C -

⑳
Effects of Fiscal ,
Monetary & Supply Side Policies on BOD Alc :

Fiscal & Policis

Monetary

Expensionary >
- AD4 >
- Income
.

/Imports
.
4

4
/Imports
&

Induced .
= MM x

/BOP >
-

Definis

Contractionary Policy : ADD - Income b

↳
Imports to
I
BOP
Simples
- .

Supply Side Policies :

↑ As - ↑GDP
Autonomou
Exports
an .

Higher
the
output (AS)
be the
higher many

Exports
& BOP 4

Protectionist Policies :
(Tariff ,
Quota ,
Embargo etc)

countrytheeRun
BOP
Many improve position of a in
.
 BOP Policies
.

Expenditure Switching :

Goods
Imported to
Domestically produced Goods
.

Important Good
↑ the
..
e
g Tariff .
-
price of .

Price BN DS

E
P *

B D
WP + T IS + T

A Sin 2
WS
WP &

+200
>
- -200 DD

O
300 500 600 800
Output
100

500

E renditure
Y reducing Policy Contractionary : Fiscal
Monetay Policies)
S to
If ADD Demand of Imports
>
-

Dampening
 Us$S4 Pan
-

Export $5000
-+ 5000
I
US$D
+ -
300
Out Imp $3000

Net
Export
2000

Forex
Market-
Pakistan
PKR II
M -

S
Si

USDepreciat
E
300

↓
J

PKR
Appreciate .

260 · El

DI D
>
O
US$

PRR-Appreciate >
-

Export
-

Expensive P4

Importi -

Cheap Pls

Ph
PKR -

Depreciati
-

Export >
-

Cheape
Import -
>
Expensive P*