Economy Definitionshttp://economictimes.indiatimes.com/definition/category/Economy/C1. Capacity CostDefinition:Anexpenditureorcost incurredbyacompanyinordertoexpanditsbusinessoperations. Inother words, theseareexpensesincurredbyanorganizationtoincreaseitscapacity to conduct business operations.Description: Capacity costs are fixed in nature. They remain constant even when the level ofoutput varies. This part of a company's expenditure is intended to help expansion and increaseactivities, or for establishment of premises fromwhere the business operations can beconducted. This expense remains fixed irrespective of the level of business activity.or any business, it is difficult to avoid costs li!e insurance, rent payments, property taxes,depreciation on e"uipment, etc. These are examples of capacity costs. These can be avoided orminimized only by shutting down the business or outsourcing the services.2. Capital AccountDefinition: Capital account can be regarded as one of the primary components of the balance ofpayments of a nation. It gives a summary of the capital expenditure and income for a country.Description:The capital expenditure and income is trac!ed by way of funds in the form ofinvestments and loans flowing in and out of an economy. This account comprises foreign directinvestments, portfolio investments, etc. It gives a summary of the net flow of both private andpublic investment into an economy.A capital accountdeficitshows thatmoremoneyis flowing outof the economyalongwithincrease in its ownership of foreign assets and vice#versa in case of a surplus. The balance ofpayments contains the current account $which provides a summary of the trade of goods andservices% in addition to the capital account which records all capital transactions.&. Capital MarketDefinition:Capital mar!et is a mar!et where buyers and sellers engage in trade of financialsecurities li!ebonds, stoc!s, etc. Thebuying'sellingis underta!enbyparticipants suchasindividuals and institutions.Description:Capital mar!ets helpchannelise surplusfunds fromsaverstoinstitutions whichthen invest them into productive use. (enerally, this mar!et trades mostly in long#term securities.Capital mar!et consists of primary mar!ets and secondary mar!ets. )rimary mar!ets deal withtrade of new issuesofstoc!sandother securities,whereassecondarymar!et dealswiththeexchange of existing or previously#issued securities. Another important division in the capitalmar!et is made on the basis of the nature of security traded, i.e. stoc! mar!et and bond mar!et.*. Current AccountDefinition: Current account is one of the two component accounts of the balance of paymentsof a nation. It records the trade of goods and services of an economy with other countries of theworld.Description:Current account includesthreecomponents#net exchangei.e. exportsminusimportsofgoods, net exchangeofservicesandnet transferstoandfromthecountry.Thebalance in this account before accounting for the transfer component is generally referred to asthe balance of trade. In India, current account is reported by the +eserve ,an! of India.Theexchangeofgoodsandservicesisrecordedforthecurrent periodandhenceiscalledcurrent account. The current account figure reveals the pattern of foreign trade. If the balance oftrade is negative, then thecountry is importingmore goodsand servicesthan its exportsofthese. The other component of the ,-) is the capital account.