Advertisements
Advertisements
Question
Distinguish between current account and capital account
Solution
Current account and capital account
| Current account | Capital account |
| Current account transactions bring a change in the current level of economy’s income. |
Capital transactions bring a change in the capital stock of an economy |
| It is a flow of concept as it includes all items of flow nature. |
It is a stock concept as it includes all items expressing changes in stock |
| Current account = visible trade + invisible trade + unilateral transfers + income receipts and payments |
Capital account = Borrowings and lendings to and from abroad + investments to and from abroad + change in foreign exchange reserves. |
APPEARS IN
RELATED QUESTIONS
Indian investors borrow from abroad. Answer the following:
a. In which sub-account and on which side of the Balance of Payments Account will this borrowing be recorded? Give reason.
b. Explain what is the impact of this borrowing on exchange rate.
Will the following be included in the domestic product of India? Give reasons for your answer.
Profit earned by a branch of State Bank of India in Japan
Will the following be included in the national income of India? Give reasons for your answer
Financial assistance to flood victims
Will the following be included in the national income of India? Give reasons for your answer
Salaries of Indians working in the American Embassy in India
Name the broad categories of transactions recorded in the 'capital account' of the Balance of Payments Account
Where is 'borrowings from abroad' recorded in the Balance of Payments Accounts? Give reasons.
Give the meanings of Balance of Trade and Balance on Current Account of Balance of Payments Accounts
What is 'current account deficit' in the balance of payments?
Distinguish between 'autonomous' and accommodating' Balance of Payments transactions.
How is balance of payment 'deficit' measured? Explain.
Distinguish between Autonomous and Accommodating transactions of Balance of Payments account.
Balance of Payments of an economy records ____________ for a fiscal year.
A balance of payments is an accounting statement that provides a systematic record of all the ______ transactions between the residents of a country and the rest of the world during a given period of time.
Categorise the following item into Current Account or Capital Account of Balance of Payment of India.
Use of transport by Indian tourists in Dubai
Categorise the following item into Current Account or Capital Account of Balance of Payment of India.
Dividend paid to foreigners on their investment in shares in India.
Categorise the following item into Current Account or Capital Account of Balance of Payment of India.
Loan taken by India from International Monetary Fund (IMF) to cover its BOP deficit
Briefly explain the effect of the following on the Balance of Payment of a country.
Inflationary pressure in the economy
If autonomous payments are higher than autonomous receipts, how can BOP be brought into balance?
List different components of Balance of Payment on current account and capital account.
