What Is the Key Identity of the Balance of Payments $\gt$

question 90

Multiple Choice

What is the key identity of the balance of payments?

• A) current account balance - capital account balance = 0
• B) current account balance + capital account balance = 0
• C) capital account balance - current account balance =0
• D) current account balance \(\gt\) capital account balance
• E) current account balance \(\lt\) capital account balance

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Definitions:

Total Surplus

In a market, the complete societal benefits are represented by the combined value of consumer and producer surplus.

Demand

The desire for a particular good or service, backed by the ability and willingness to pay for it.

Supply

The total amount of a good or service available for purchase at any given price level.

Total Surplus

The sum of consumer surplus and producer surplus in a market; it represents the total net benefit to society from the production and consumption of a good.