Business & Finance homework help| Business & Finance homework help
The current account is one of the three components of a nation’s balance of payments and it includes all transactions related to trade in goods, services, income and transfers. International balance of payments also includes the capital and financial accounts, which are used to measure international financial flows. This includes foreign direct investments, portfolio investment and other long-term investments like loans or debt securities.
Balance of payments is affected by the U.S. imbalance in trade goods. This provides important insights about bilateral trade and can help to identify any potential imbalances. Decision makers can use this information to help them formulate better strategies for resolving deficits. They can also look at ways to increase or decrease exports, thereby strengthening economic ties.
Overall, both current account and capital/financial accounts play key roles when it comes down to understanding how different nations interact with each other from financial standpoint thus making their analysis essential for country’s economic performance overall.