In: Economics
there are three important components of the balance of payments. they are the financial account, the capital account, and the current account.
the financial account is the change in international ownership of
assets. the financial account made by both capital and current
account. if the foreign ownership is more than domestic ownership
then it creates a deficit in this account. for example, the country
is selling off its assets like gold, stock, faster than it is
acquiring foreign assets.
the capital account is any financial transactions that don't affect
economic output. the capital account accounted for financial
transactions that don't affect the income, production or saving of
the country. for example, it records international transfers of
drilling rights, copyrights, and trademarks.
the current account measures international trade, the net income on
investment and direct payments. the current account measures direct
payment, trade balance plus the effects of net income. for example,
to fund all their purchases, business activity and government
spendings etc.