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what is the definition of" current account surplus"?

 
 
Adverb
 
Reply Sat 26 Sep, 2009 09:05 am
what is the definition of" current account surplus"?
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Type: Question • Score: 3 • Views: 4,321 • Replies: 2
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contrex
 
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Reply Sat 26 Sep, 2009 09:27 am
@Adverb,
The balance of trade is the difference between a nation's exports of goods and services and its imports of goods and services, if all financial transfers and investments and the like are ignored. A nation is said to have a trade deficit if it is importing more than it exports.

In economics, the current account is one of the two primary components of the balance of payments, the other being the capital account. It is the sum of the balance of trade (exports minus imports of goods and services), net factor income (such as interest and dividends) and net transfer payments (such as foreign aid).

The current account balance is one of two major metrics of the nature of a country's foreign trade (the other being the net capital outflow). A current account surplus increases a country's net foreign assets by the corresponding amount, and a current account deficit does the reverse. Both government and private payments are included in the calculation. It is called the current account because goods and services are generally consumed in the current period.

http://en.wikipedia.org/wiki/Current_account

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High Seas
 
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Reply Sat 26 Sep, 2009 09:34 am
@Adverb,
The current account of the balance of payments of a country includes the combined balances on trade in goods, services, income, and net unilateral current transfers. If it's positive it's called a surplus, if it's negative it's a deficit.

By definition it is balanced by the capital account of the balance of payments, i.e. a deficit in the current account must equal a surplus in the capital account and vice versa.
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