ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In economics, the capital account is the part of the balance of payments that records net changes in a country’s financial assets and liabilities. The current account records a country’s imports and exports of goods and services, foreign investors’ payments, and transfers, such as foreign aid.

Detailed explanation-2: -The balance of payments summarises the economic transactions of an economy with the rest of the world. These transactions include exports and imports of goods, services and financial assets, along with transfer payments (like foreign aid).

Detailed explanation-3: -The balance of payments (BOP) of a country is the record of all economic transactions between the residents of a country and the rest of the world in a particular period (over a quarter of a year or more commonly over a year).

Detailed explanation-4: -The capital account measures the capital transfers between U.S. residents and foreign residents. The financial account reflects increases or decreases in a country’s ownership of international assets.

Detailed explanation-5: -The current account is used to mark the inflow and outflow of goods and services into a country. The capital account is where all international capital transfers are recorded.