Current account - balance of payments, Microeconomics

Assignment Help:

Current Account:

The Current Account can be broken down into two parts, viz., one, balance of trade, and, two, balance on invisibles. The Balance of Trade (BOT) deals only with exports and imports of merchandise (or visible items). The Balance on Invisibles (BOI) shows net receipts on account of invisibles. These include the remittances, net service payments, etc. It is not necessary that the BOT should always balance; more often than not, it will show either a surplus or a deficit. Similarly, the BOI will always show either a surplus or a deficit. A surplus on BOT may be matched with a surplus or deficit on BOI. If the surplus on BOI equals the deficit on BOT, the current account will show a net balance. But then there is no reason why these two balances should always be equal, again, always in opposite directions. As a matter of fact, the balance on current account can always show a deficit or a surplus. A surplus on current account leads to an acquisition of assets or repayment of debts previously contracted, and a deficit involves withdrawal of previously accumulated assets or is met by borrowings.   


Related Discussions:- Current account - balance of payments

Market competition., explain why policies for promoting market competition ...

explain why policies for promoting market competition are desireable

What are the basic economic institutions, What are the basic economic insti...

What are the basic economic institutions? There are two fundamental economic institutions which have been so far used into the real world are as: a. Market economic institut

Indifference curves between consumption goods and leisure, How many hours w...

How many hours will an individual allocate to leisure if their indifference curves  between consumption goods and leisure are concave to the origin? Show in figures and explain in

Stockholders and managers, Normal 0 false false false E...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4 1. Suppose that the

Short run, critically evaluate the two main utility theories

critically evaluate the two main utility theories

Policies for technological advance, Policies for Technological Advance ...

Policies for Technological Advance Without better technology, increases in capital stock generated by investment rapidly run into diminishing returns. And without improvements

Unemployment, Unemployment: Unemployment refers to a situation where p...

Unemployment: Unemployment refers to a situation where people who are willing and able to work do not find jobs at the existing wage rate.For a person to be referred to as une

Define the term supply, Demand is defined as a schedule of the quantities f...

Demand is defined as a schedule of the quantities fo good that will be purchased at various prices similarly the supply refers to the schedule of the quantities of a good that will

Warehousing facilities and supply of trade information, Warehousing Facilit...

Warehousing Facilities: These should be expanded in important commercial centres abroad, specially for fast-moving consumer goods. Nowadays, foreign buyers are reluctant to keep

Nature of expectations in keynes' theory, Nature of Expectations in Keynes'...

Nature of Expectations in Keynes' Theory : The above discussion on the nature of expectations in Keynes' theory may be summarised as follows: 1) In forming long-term expec

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