Basic Balance

DEFINITION of 'Basic Balance'

An economic measure for the balance of payments that combines the current account and capital account balances. The basic balance represents an alternative approach to the surplus or deficit for the balance of payments under pegged exchange rate systems.

BREAKING DOWN 'Basic Balance'

Economists use the basic balance to help determine long-term trends in a country's balance of payments. The measure is less sensitive to short-run fluctuations in the interest or exchange rates, providing insight for the long term. The basic balance incorporates international investment fluctuations from the capital account, making it more responsive to long-term changes in a nation's productivity.

RELATED TERMS
  1. Average Balance

    The balance on a loan or depositary account. A simple average ...
  2. Balance Of Payments (BOP)

    A record of all transactions made between one particular country ...
  3. Current Account

    The difference between a nation’s savings and its investment. ...
  4. Minimum Balance

    The minimum dollar amount that a customer must have in an account ...
  5. New Balance

    The new balance is the sum of your previous balance, payments, ...
  6. Average Daily Balance Method

    A credit card accounting method where interest charges are based ...
Related Articles
  1. Economics

    What does Current Account mean?

    The current account reflects the difference between a country’s savings and investments.
  2. Economics

    The Balance Of Payments

    The "Balance of Payments" is a record of all payments or monetary transactions between a particular country and other nations during a specific time period. It provides a useful glimpse into ...
  3. Economics

    What's the Balance of Trade?

    The balance of trade is the difference between the value of all the goods and services a country exports and the goods and services it imports.
  4. Professionals

    Foreign Exchange Parity Relations

    CFA Level 1 - Foreign Exchange Parity Relations - Basics. An explanation on how exchange rates are determined through analysis of the current account, balance of payments, and financial accounts
  5. Retirement

    Economic Indicators: Trade Balance Report

    By Ryan Barnes Release Date: International Trade - around the 19th of the month Release Time: International Trade - 8:30am Eastern Standard Time ...
  6. Economics

    What Is The Balance Of Payments?

    The balance of payments helps countries to track how much money is coming in and how much money is going out. Learn more about BOPs here.
  7. Investing

    What's a Trial Balance?

    A trial balance is a worksheet listing the debit or credit balances of all the ledger accounts for an entity. Under accounting theory, the total of all the debits must equal the total of all ...
  8. Economics

    Exploring The Current Account In The Balance Of Payments

    Learn how a country's current account balance reflects the country's economic health.
  9. Credit & Loans

    Transferring Credit Card Balances To A New Card

    Before you take advantage of that new credit card's 0% interest balance transfer offer, read our step-by-step guide.
  10. Credit & Loans

    1. Clear the Balance

    Learn when it's a good idea to close a credit card, and how to make sure you do it right.
RELATED FAQS
  1. Which is more important to a nation's economy, the balance of trade or the balance ...

    Learn how to differentiate between the balance of trade and balance of payments for international trade and why the balance ... Read Answer >>
  2. Is a deficit in the balance of payments a bad thing?

    Discover how it might be possible to run a balance of payments deficit, what that means in terms of international trade and ... Read Answer >>
  3. What's the difference between the current account and the balance of payments?

    Learn about the differences between balance of payment and current account; discover different uses of each term and how ... Read Answer >>
  4. What's does the current account have to do with the trade balance?

    Learn how a nation's trade balance is factored into its current account, and the differences between these two common terms. Read Answer >>
  5. What is the difference between the current account and the capital account?

    Learn how to differentiate between the capital account and the current account, the two components of the balance of payments ... Read Answer >>
  6. What's the difference between a trial balance and a balance sheet?

    Discover what is included in a trial balance and a balance sheet, and learn about what sets these two accounting reports ... Read Answer >>
Hot Definitions
  1. Goodwill

    An account that can be found in the assets portion of a company's balance sheet. Goodwill can often arise when one company ...
  2. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  3. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  4. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center