Capital Account

Capital Account

Capital budgeting

In Macroeconomics and international finance, the capital account is one of 02 primary components of the balance of payments, the other being the current account. Whereas the current account reflects a nation's net income, the capital account reflects net change in national ownership of assets. The term "capital account" is used with a narrower meaning by the IMF and affiliated sources. The IMF splits what the rest of the world call the capital account into two top level divisions: financial account and capital account, with by far the bulk of the transactions being recorded in its financial account.

Article Review

Cook, Laura (2006, May 9). Nations Fastest-Growing School System Manages Growth with VFA Capital Planning and Management Solutions: VFA Helps Clark County (NV) School District Optimize Facilities and Infrastructure Investments. Business Wire. Retrieved May 19, 2006 from: VFA is a corporation that provides capital planning and management. And because of the technology and software of VFA, Lorenzo says that the county will be able “strategically manage…fiscal planning” of all 4.6 million square feet within the district's 40 schools (Cook, 2006, 3).

A nation's ability to prevent its own currency falling in value is limited by the size of its foreign reserves; it needs to use the reserves to buy back its currency. Conversely, there are no immediate limits preventing a nation from keeping its currency from rising in value- as it just needs to sell its own currency, and can always prints more in order to do this - however this can cause inflation if additional mitigation measures aren't implemented and can lead to political pressure from other countries if they consider the nation is making its exports excessively competitive.

For example, in the 20th century Great Britains central bank, the Bank of England, would sometimes use her reserves to buy large ...