Components Of The Balance Of Payments Accounts: Current Account, Financial Account And Capital Account
Economics notes
Components Of The Balance Of Payments Accounts: Current Account, Financial Account And Capital Account
➡️ The current account measures the net flow of goods, services, and income between countries. It includes exports and imports of goods and services, income payments such as wages and interest, and transfers such as foreign aid.
➡️ The financial account measures the net flow of financial assets between countries. It includes investments in foreign stocks and bonds, foreign direct investment, and other financial transactions.
➡️ The capital account measures the net flow of capital between countries. It includes foreign aid, foreign investment, and other capital flows.
What is the current account in the balance of payments accounts and what does it measure?
The current account is a component of the balance of payments accounts that measures the flow of goods, services, income, and transfers between a country and the rest of the world. It includes exports and imports of goods and services, income from investments and employment, and transfers such as foreign aid and remittances. The current account is an important indicator of a country's economic performance and its ability to pay for its imports and service its debt.
What is the financial account in the balance of payments accounts and what does it measure?
The financial account is a component of the balance of payments accounts that measures the flow of financial assets and liabilities between a country and the rest of the world. It includes foreign direct investment, portfolio investment, and other investments such as loans and currency swaps. The financial account is an important indicator of a country's ability to attract foreign investment and finance its economic growth.
What is the capital account in the balance of payments accounts and what does it measure?
The capital account is a component of the balance of payments accounts that measures the flow of capital between a country and the rest of the world. It includes capital transfers such as debt forgiveness and the sale or purchase of non-produced, non-financial assets such as patents and copyrights. The capital account is an important indicator of a country's ability to attract foreign investment and finance its economic growth.