A Very Simple Understanding of a Nation's Economy - Nigeria

Picture credit: www.hopeofnigeriaonline.com

The economy can be defined by three major accounts and what are these accounts?

1. Current Account
2. Capital Account
3. Foreign Reserve

Every Nation of the world like Nigeria is defined by these accounts, they control the entire economy. When you here people or experts talk about a country's economy, they are talking about these three accounts. You must have heard things like GDP, GNP and GDP per Capital hmmmm just relax.
first and foremost let us look at the three accounts in a very simple way shortly:

1. Current account: The sum of balance of a country's trade which means the balance money gotten from export and import.Example, If we export cassava and crude oil to Europe for 100 Naira and import tooth pick, canned food, rice and so on for 70 Naira, our current account here is 30 Naira because we sold what we have for 100 Naira and spent 70 Naira for what we don't have the change will be 30 Naira. So if we export more and import less, we will have a bigger current account that is a huge economic indicator. But if we import more than we export we will have the opposite which is called current account deficit.
2. Capital account: The total money a country makes from private and public international investment. It is very simple, example: MTN, Multichoice, Shoprite, Ecobank, Shell and so on are foreign companies, they are not Nigerian owned companies like GLO, Con oil, NNPC and more. These companies bring in heavy amount of money from their countries to build offices, employ Nigerians, and put some of these monies in our banks, you see, the current account is a source of money inflow into our country and likewise Nigeria can take big money too Like dangote and invest in countries like South Africa, England, Brazil and more and bring back huge profits to Nigeria.
3. Foreign or International Reserve: As the name implies, it is money reserved or kept that can be spent by the central banks of different countries. They are in currencies like dollars, euro, gold or any other acceptable form of money. Countries usually have this account for some reasons such as precaution, speculative, liability, and it could also be for investment too.

Having said these, what is GDP? GDP is simply the money for expenditure or spending of a country within a period say one year as a result of the county's product (crude oil, cassava, cocoa, palm oil) and services (doctor, nurses, teacher, engineer, special talents, entertainment).
What is GDP per capital? If the country's money is divided per people in that country the mount that will be shared each is the GDP per capital.
By Von Apochi
@vonapochi