ABSTRACT
The fi nal-buying (of goods and services) by foreign countries from-let us saythe home country constitutes the exports of the latter. The inquiry we are about to make will show that the total money value of the home country’s exports in relation to the total money value of its imports only increases-or, in other words, its balance of foreign trade only “improves”— in one or both of the following cases: fi rst, when all outward transfers of money income or money capital for use, investment or safe-keeping abroad are increased in relation to all similar inward transfers, the aggregate money value of all visible and invisible exports37 of goods and services and gold increases in relation to the aggregate money value of all like imports. Second, when, other things being equal, the aggregate money value of net imports of gold is increased in relation to the aggregate money value of imports of goods and services,38 imports of goods and services are decreased in relation to exports of goods and services. In these circumstances it is to be expected that variations in the home country’s foreign trade balance must be irregular, and that the velocity of fi nalbuying by countries abroad from the home country must decrease and aggravate, as often as it increases and neutralizes, any inadequate home velocity of fi nal-buying. For the purpose of this inquiry, we must examine: (1) the effects of variations in price-levels; (2) the effects of foreign payments or transfers of money on pricelevels and on rates in the foreign exchange market; (3) the effects of foreign payments or transfers of money on exports and imports; (4) the effects of foreign investments on exports and imports and (5) the relation of the price-level to the foreign exchange value of the currency.
