Capital account

Okay kiddo, imagine you have a piggy bank where you put all your money in. Now, let's say you have some extra money that you want to use for something special like buying a toy or going on a trip. That extra money is like what we call the "capital."

Now, imagine that there are big piggy banks for whole countries called the "capital account." They keep track of all the money that comes into and goes out of a country. Money coming into the country is like putting money into the capital account piggy bank and money going out of the country is like taking money out of the capital account piggy bank.

Sometimes, people and businesses might want to invest their money in other countries, like buying stocks or investing in a business. This is called capital investment and it adds to the capital account of the country receiving the investment.

Other times, countries might borrow money from other countries or international organizations to pay for things like building roads or schools. This is called foreign borrowing and it subtracts from the capital account of the borrowing country.

Overall, the capital account is important because it helps countries keep track of where their money comes from and where it goes, and it can impact the economic growth of a country.