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
Q. Characteristics of perfect competition market? Following are the characteristics of perfect competition market:  • Large Number of Sellers andBuyers: As there are a lar

how to solve problems using derivatives ?


Q. Illustrate about Sales maximisation? The concept that business firms (specifically those operating in the real world) are principally goaded by the aspiration to achieve the

PUBLIC EXPENDITURE The accounts of the central government are centered on two funds, the Consolidated Fund, which handles the revenues form taxation and other miscellaneous re

The relationship between, total expenditure and price elasticity of demand has summed up in the below table: Table: Elasticity and Consumption Expenditure Elas

Limitations of Open Market OperationsLimitations For their success central bank open market operation assume that commercial banks in the country will expand their credit port

in the context of oligopoly theory explain the channels via which either a cost reduction or a quantity increase influence a supplier''s profitability

Other Determinants 1.          Rate of Interest Is contained in the argument of the classified economists who argued that rational consumers will save more and consume les

No demand forecasting method is 100% accurate. Collective forecasts develop precision and reduce the probability of huge mistakes.  Methods which relay on Qualitative Assessmen