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The trade balance and the current account are closely related in international economics. The trade balance measures the difference between a country's exports and imports of goods and services, while the current account includes the trade balance along with other financial transactions such as income from investments and transfers. A surplus in the trade balance typically leads to a surplus in the current account, indicating that a country is exporting more than it is importing and earning more from foreign investments than it is paying out. Conversely, a deficit in the trade balance usually results in a deficit in the current account, showing that a country is importing more than it is exporting and paying out more in foreign investments than it is earning.

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In economics what is a capital account?

A capital account in economics, is one of two primary components, the balance of payments, and the current account. The current account reflects the nation's net income, and the capital account reflects the net change in the national ownership of assets.


Why can't all the balance of payments accounts be in surplus?

The balance of payments accounts cannot be in surplus because there is always a balance in economics. For example, if you used cash assets to purchase equipment, the equipment account will increase but the cash assets account will decrease.


What is the relationship between capital account balance and current account balance?

The balance of payments, then, is the sum of the balance on current account and the balance on capital and financial account. It is important to understand that the deficit indicated by the current account is financed through activities recorded on the capital and financial account. The deficit on the current account must be exactly offset by the surplus on the capital and financial account (if it is not, net errors and omissions will correct it). This means then that the sum of the current account and the capital and financial account is equal to zero.


What is the relationship between the balance of payments BOP and interest rates?

If the interest rate is lower and balance of payment is large then the currant account will be deficit


How would you describe the reserve account of a nation's balance of payments?

One last category of international transactions involves those arising among governments and central banks. These transactions are recorded in the official reserve account of a nation's balance of payments.

Related Questions

In economics what is a capital account?

A capital account in economics, is one of two primary components, the balance of payments, and the current account. The current account reflects the nation's net income, and the capital account reflects the net change in the national ownership of assets.


The relationship between current account balance and GDP?

The relationship between the current account balance and the GDP is that they both reflect the production in the given economy. They both deal with the net production.


Why can't all the balance of payments accounts be in surplus?

The balance of payments accounts cannot be in surplus because there is always a balance in economics. For example, if you used cash assets to purchase equipment, the equipment account will increase but the cash assets account will decrease.


If your name is on a checking account with someone else and she passes what happens to the balance on the checking account?

It depends on your relationship to the deceased and if there was a will.


What is the relationship between capital account balance and current account balance?

The balance of payments, then, is the sum of the balance on current account and the balance on capital and financial account. It is important to understand that the deficit indicated by the current account is financed through activities recorded on the capital and financial account. The deficit on the current account must be exactly offset by the surplus on the capital and financial account (if it is not, net errors and omissions will correct it). This means then that the sum of the current account and the capital and financial account is equal to zero.


What is the relationship between the balance of payments BOP and interest rates?

If the interest rate is lower and balance of payment is large then the currant account will be deficit


The relationship between the amounts on the adjusted trial balance for an account and its ledger?

The adjusted trial balance reflects the balance of each account on the ledger. If there is a $1000 debit to Cash and a $200 credit to Cash in the same accounting period, the balance on the ledger will be $800 Cash. This $800 Cash balance will be reflected on the adjusted trial balance. In sum, the adjusted trial balance reflects the net of an account each accounting period.


What is the relationship if any between the amount shown in the adjusted trial balance column for an account and that accounts ledger balance?

The ledger balance shown in the trial balance and adjusted trial balance represents the amount of adjustments to be made.


What has the author C J Jepma written?

C. J. Jepma has written: 'Tropical deforestation' -- subject- s -: Deforestation 'Introduction to international economics' -- subject- s -: Commercial policy, Balance of payments, International economic relations, International trade, International finance


How can you find out your account balance?

Your account balance can easily be accessed by visiting your banker's site,click on account balance after putting your account no and you will have it instantly. Or you can update your bank passbook to ascertain your account balance.


The amount of money in a bank account is called what?

account balance


How would you describe the reserve account of a nation's balance of payments?

One last category of international transactions involves those arising among governments and central banks. These transactions are recorded in the official reserve account of a nation's balance of payments.