Explanation and Illustration of the Current Account, the Capital Account and the Financial Account of the Balance of Payments. Illustration of the J-Curve Effect in Relation to the Marshall-Lerner Condition

In this article, we explain and illustrate the current account, the capital account and the financial account of the balance of payments. We illustrate the J-curve effect in relation to the Marshall-Lerner condition. The balance of payments shows the international financial position of the country and summarises the main economic transactions of Greece at a specific year with the rest of the world. The transactions are classified into three main categories. The current account, the capital account, and the financial account. Economic transactions that are recorded as exports and imports could be goods such as fruits, vegetables, poultry and financial or business services. A credit transaction means a receipt of a payment from abroad. In contrast, a debit transaction means a payment to abroad. The balance of payment is recording a deficit or a surplus. A deficit is when debits exceed credits in the main accounts. In contrast, a surplus occurs when credits exceed debits. Both debit and credit are used in a double entry ledger account to record the transactions of Greece in relation to a foreign country