Principles of Macroeconomics / Unit 7 MAC 0603 short lesson, about 20 seconds
The Three Accounts
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The idea
The balance of payments records every transaction between residents and foreigners, in three accounts: the current account, the capital account, and the financial account.
In practice
The financial account records investment flows: deposits abroad, loans, purchases of foreign stocks and bonds.
Where people slip
Older books call that the capital account. Today the capital account is a small separate item, mainly debt forgiveness and similar transfers.
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