Current account, Managerial Economics

Assignment Help:

The Current Account

This records all transactions involving the exchange of currently produced goods and services and is subdivided into

i.          Visibles:

A record of all receipts from abroad the export of goods and all expenditures abroad on the import of goods.  When these are compared, this is known as the "balance of  trade" (though it would be properly called the "balance of visible trade").

ii.          Invisibles:

A record of all receipts from abroad in return for services rendered and all expenditure abroad for foreign services.  It also includes receipts of profits and interest earned by investments abroad, and similarly profits and interest paid abroad to foreign owners of capital in the country are included in Expenditure.  The comparison of all the debits (Expenditure abroad) and credits (receipts from abroad) arising from visibles and invisibles is known as the "balance of payments on current account" and is the best indicator of the country's trading position.

If the value of exports exceeds the value of imports the balance of payments is said to be in Trade Surplus.   This is regarded as a favourable position because a persistent trade surplus means the country's foreign exchange reserves are rising and so its ability to pay for its imports and settle its international debts.  Also a trade surplus is regarded as a sign of success in the country's trade with other countries and is, therefore, politically desirable.

On the other hand, if the value of imports exceeds the value of exports, the balance of payments is in trade deficit.  This is an unfavourable position because a persistent balance of payments trade deficit means that the country's foreign exchange reserves are being run down and so is its ability to pay for its imports and settle its international debts. Also a persistent balance of payments trade deficit is regarded as a sign of failure in the country's trade with other countries and is therefore politically undesirable.


Related Discussions:- Current account

Describe the managerial decisions, Describe the Managerial decisions Ma...

Describe the Managerial decisions Managerial decisions are an important component in the working wheel of an organisation. The failure or success of a business depends upon the

Product of marginal revenue, Q. Product of marginal revenue? MRPL is th...

Q. Product of marginal revenue? MRPL is the product of marginal revenue and marginal product of labour or MRPL = MR x MPL. • Derivation: MR = ?TR/?Q MPL = ?Q/?L

What is the theory of the firm, What is the theory of the firm A firm c...

What is the theory of the firm A firm can be considered an amalgamation of people, financial and physical resources and a variety of information. Firms exist as they perform us

Projection method of demand forecasting, Explain trend projection method of...

Explain trend projection method of demand forecasting with illustration.

Calculate the output and price in market, Question: Discuss the pricing...

Question: Discuss the pricing practices adopted by firms under different market structures. OR A firm produces a good, which is sold on delivery and in restaurants. The d

Generate a computer code for solidification situation, Generate a computer ...

Generate a computer code to simulate the following solidification situation during a casting process: The material is a well-known polymer known as PEEK (polyetheretherketo

Regressive tax, REGRESSIVE TAX A tax is said to be regressive when its...

REGRESSIVE TAX A tax is said to be regressive when its burden falls more heavily on the poor than on  the rich.  No civilized government imposes a tax like this.

Economic theories, Topic:  Company Case Study and Industry Analysis   ...

Topic:  Company Case Study and Industry Analysis   Instruction:  1) choose a company;                     2) recognize the market industry type;                     3)

Describe the optimisation of managerial economics, Describe the Optimisatio...

Describe the Optimisation of managerial economics Optimisation techniques are perhaps the most vital to managerial decision making. Given that alternative courses of action are

Perfectly inelastic (zero elastic) supply, Perfectly Inelastic (Zero Elasti...

Perfectly Inelastic (Zero Elastic) Supply Supply is said to be perfectly inelastic if the quantity supplied is constant at all prices.  The supply curve is a vertical straight

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd