Question

Explain what is included in each of these 2 accounts in Canada:

Capital or Current account

Increase or decrease in the balance

A Canadian purchases a house in Florida.

Canada imports masks from Germany

An Italian purchases shares of CIBC

Japan imports Maple syrup from Canada

An American purchases a house in Hamilton

Answer 1

First lets see what current account and capital accounts are.

The current account represents a country's net income over a period of time, while the capital account records the net change of assets and liabilities during a particular year.

With this information, we can fill the table. When an export from Candad is done, it affects the current account and increases its balance. An import also affects current account but decreases the balance. When Canada/Canadian purchase an asset outside (house, shares etc), it affects Capital account and increasese it. When someone else purchases an Canadian asset, it affects Capital account but decreases it.

The filled table is shown below.