Economics CPD Courses

Economics CPD Courses Coming up this Term!- Book Your Places Now!

WOW! Economics 2015   |   Quantitative Methods (New Spec)


Economics Resources Popular resources on the {my channel} blogPopular resources on the {my channel} blog Economics revision quizzes Resource tags for the blog RSS Feed for the blog Twitter feed for this blog Teacher Email Resource Newsletter Category listing for this blog Economics Blog home page Economics Blog Home Page


Tracker Pixel for Entry

Q&A: Current and Capital Account

Monday, June 01, 2009
Print Tweet This!Save to Favorites

Q: Please explain the difference between the current and the capital account on the balance of payments

The current account is the

Balance of

Trade in goods
Trade in services
Net investment income from external assets
Net transfers

Capital account captures inflows and outflows of different forms of capital

Portfolio investment e.g. money flowing into / out of stock markets, pension funds, hedge funds etc
Direct capital investment e.g. fixed investment in factories
Short term banking flows ... also known as hot money

In principle a country running a current account deficit can ‘balance’ things up by running a surplus on the capital account - the UK is a good example, because the economy has been a favoured location for FDI and there is a strong appetite among foreign investors for UK government bonds

A country running a current account surplus can run capital account deficits i.e. invest heavily overseas or just accumulate foreign exxchange reserves e.g. China, Norway, Oil exporting nations .... some of whom have created their own sovereign wealth funds

In principle the BoP must balance .... it does so because of adjustments that countries make to their foreign exchange reserves using IMF agreed accounting measures and also because of the balancing item which reflects errors and ommissions!




Economics CPD Courses in June 2014

Economics CPD Courses in June 2014 - Book Your Places Now!

ETNC 2014   | New to AS & A2 Economics | WOW! Economics 2014


tutor2u online store

PowerPoint Lesson Activities Teacher Conferences & CPD Courses
Exam Coaching & Revision Workshops Pre-release Case Study Toolkits
A Level Economics Teaching Support Resources for Business Studies
Digital Magazines  


Enter your Email


WOW! Economics 2015

Dates and Locations announced for WOW! Economics 2015

AS, A2 & IB Economics Revision Notes

Latest resources

Resource categories Blog RSS feed Blog RSS Feed

© Copyright Tutor2u Limited 2013 All Rights Reserved