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Describe the capital and financial accounts of the balance of payments

Block Type
Knowledge Checkpoint
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Knowledge Checkpoint: Describe the capital and financial accounts of the balance of payments (4 marks).

You must describe both capital and financial accounts to gain full marks.

1 mark for each valid description.

A model could be:

The capital account focuses on large, one-time transactions involving significant changes in a country’s assets or liabilities (1). It includes the transfer of ownership of fixed assets, such as buying or selling land in other nations (1).

The financial account tracks international investment activities and money movements across borders (1). It records direct investment, which involves the ownership of foreign businesses, such as when foreign-owned businesses take over domestic companies (1).