Distinguish between Current Account and Capital Account of the balance

1.	Distinguish between Current Account and Capital Account of the balance of Payments Account on the basis of its components.
Answer» Current Account- It is the account that records imports and exports of goods, services and unilateral transfers. Components of Current Account: (i) Merchandise account (ii) Invisible items, and (iii) Unilateral transfers, Capital Account - It records capital transfers such as loans and investments between one country and the rest of the world which causes a change in the asset or liability status of the residents of a country or its government. Components of Capital Account: (i) Private loans (ii) Movement of banking capital, (iii) official capital transactions, (iv) Reserves and monetary gold, and (v) Gold movement.

Distinguish between Current Account and Capital Account of the balance of Payments Account on the basis of its components.

Answer»

Current Account- It is the account that records imports and exports of goods, services and unilateral transfers.

Components of Current Account:

(i) Merchandise account (ii) Invisible items, and (iii) Unilateral transfers,

Capital Account - It records capital transfers such as loans and investments between one country and the rest of the world which causes a change in the asset or liability status of the residents of a country or its government.

Components of Capital Account:

(i) Private loans (ii) Movement of banking capital, (iii) official capital transactions, (iv) Reserves and monetary gold, and (v) Gold movement.

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