You attend a alumni event in Santiago Chile and you meet the Governor of the central bank. The governor tells you that the country experiences “deficits in the capital account of the Balance of Payments.” Based on this statement, what do you infer about the Peruvian economy?
A capital account shows the net change in physical or financial
asset ownership for a nation and, together with the current
account, constitutes a nation's balance of payments. The capital
account includes foreign direct investment (FDI), portfolio and
other investments, plus changes in the reserve account.
If a country has deficit in capital account,it means that it is
investing more abroad and the rest of the world is investing less
in Peru.If the capital account is in deficit,thw current account
must be in surplus to equalize balance of payments.However,if the
current account is also in deficit then the balance of payments
would be in deficit.
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