Fund or loans borrowed from outside world or non-resident lenders by corporates, commercial banks or governments is known as external commercial borrowing. Country with current account deficit needs capital account surplus to balance current account deficit. Capital account surplus implies that the country is debitor to the outside world. It means that foreigners have more […]
Understanding the complexities of economic systems, it is essential to know that how market or open economy different from closed economy? On the basis of political ideologies people of the nation pursue, economic system has been adopted to fulfill the pledged demands. If the economic activities are driven by the forces of market demand and
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In the open economy, hardly there are political barriers barring some socialistic states, to restrict the flow of investment. Popularly, there are two types of foreign investments –portfolio and direct investment. Foreign portfolio investment and foreign direct investment Nowadays, investors transfer surplus funds out of country expecting better income in return. If the fund is
International trade transactions other than merchandise goods are termed as invisible trade balance. It includes services, investment income and current transfers. On the other hand, merchandise goods are other major part of the trade balance. You know that Visible and Invisible trade balance are part of current account of balance of payments. To find out
Balance of payments is a statement of economic transactions one country does with the rest of the world within a year of period. BOP is a yardstick to judge the strength of economy of the given country in relation to other countries in the world. So, in detail, explaining balance of payments is utmost important
Currency crisis and currency war are two different phenomena but bring same results, and that is sharp decline in the value of currency. It is also called devaluation of currency. Meaning and definition of currency crisis or war In currency crisis, currency gets devalued due to huge deficit of balance of payments. But, in case
In the today’s economically integrating world, political borders are not so effective to control the flow of capital when the countries are fully convertible on current account. When the world is single marketplace, the importance of currency market and need for convertibility is growing never before. Let’s learn the currency market and convertibility in detail.