Capital account, Managerial Economics

CAPITAL ACCOUNT

This records all transactions arising from capital movements into and out of the country.  There are a variety of such capital flows recorded, namely:

i. Long term capital:

This consists of:

a.        Government to Government borrowing and lending

b.       Government borrowing from international organizations

c.        Investment by foreigners at home in such projects as factories, mines and plantations and by nationals abroad in similar projects.

d.       The buying of shares by foreigners in home companies and by nationals in foreign companies.

ii.   Short term capital ("hot money")

Refers to changes in bank balances held by foreigners in home banks and by nationals in foreign banks.

If money comes into the country (e.g. deliberate borrowing abroad by a domestic company or foreign investment in the country), it is recorded as a credit item, while investments abroad etc is recorded as a debit item.

When the current account and the capital account are combined, and we compare the total debits and credits, this is termed the balance for official financing (it used to be termed the  "total currency flow").  This shows the final net outflow, or inflow arising from current and capital transactions.

Posted Date: 11/30/2012 5:18:40 AM | Location : United States







Related Discussions:- Capital account, Assignment Help, Ask Question on Capital account, Get Answer, Expert's Help, Capital account Discussions

Write discussion on Capital account
Your posts are moderated
Related Questions
Factors affecting the long run trend of the Terms of Trade for developing countries Most Third World countries have been faced by a fall in their terms of trade over the long

"A budget deficit that is only temporary cannot be the source of inflation."  Is this statement true, false, or uncertain?  Describe your answer.

Average Total Costs (ATC) This is total cost per unit of output, obtained by dividing total cost by total output i.e. ATC   =   Total Cost              Total Outp

Calculate point elasticity of demand for demand function Q=10-2p for decrease in price from Rs 3 to Rs 2

Equilibrium Income In this model, aggregate desired expenditure has three components:  Consumption, Investment and Government Expenditure:

Goverment Banker, Fiscal Agent and Adviser Central banks in all countries acts as the fiscal agent, banker and adviser on all important financial matters to government of thei

Question 1: a. What are the different channels of monetary policy? b. Discuss why the channels of monetary policy are likely to change in the wake of financial liberaliz

A company is selling a  particular brand of tea and wishes to introduce a new flavor. How will the company forecast demand for it.

Case study for consumer behavior using indifference curev

Determine Optimal Price, Quantity and Economic Profit A firm has a demand function P = 200 – 5Q and cost function: AC=MC=10 and a potential entrant has a cost function: AC=MC=20