Current account (balance of payments)
A current account is like a piggy bank that keeps track of all the money you get and spend on things outside of your own country. It is a way to measure a country's economic transactions with other countries.
Imagine you have a piggy bank, and you get $5 from your sister who lives in another country. That’s like the current account surplus because you have more money coming in from another country than going out.
Now, if you spend $3 on buying a toy from an online store in another country, then that’s like a current account deficit because you have more money going out of your piggy bank to another country than coming in.
This piggy bank is what we call the current account balance of payments that keeps track of all imports and exports, the money people send to other countries, the money they get from other countries, and tourist expenses. It's important to keep this piggy bank balanced or else you'll run out of money. Just like in real life, if a country's current account has more money going out than coming in, it can cause a problem for its economy.
Imagine you have a piggy bank, and you get $5 from your sister who lives in another country. That’s like the current account surplus because you have more money coming in from another country than going out.
Now, if you spend $3 on buying a toy from an online store in another country, then that’s like a current account deficit because you have more money going out of your piggy bank to another country than coming in.
This piggy bank is what we call the current account balance of payments that keeps track of all imports and exports, the money people send to other countries, the money they get from other countries, and tourist expenses. It's important to keep this piggy bank balanced or else you'll run out of money. Just like in real life, if a country's current account has more money going out than coming in, it can cause a problem for its economy.
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