Differentiate Between the Current Account Balance and the Capital Account

question 65

Essay

Differentiate between the current account balance and the capital account balance.

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Definitions:

Diseconomies of Scale

The phenomenon where production costs increase as a firm expands output, leading to reduced efficiency.

U-Shaped Long-Run Average Cost Curve

This describes the phenomenon where, over time, average costs first decrease with increased production, hit a minimum, and then increase with further production increase, forming a U-shape.

Minimum Cost

The lowest possible expense at which a particular set of goods or services can be produced or acquired.

Long-Run Average Cost Curve

A graphical representation showing how the average cost of production changes as the scale of production is altered over the long term, reflecting economies and diseconomies of scale.