The Sum of the Current Account, the Capital Account, and the Official

question 182

Multiple Choice

The sum of the current account, the capital account, and the official reserve transaction account is

• A) always positive.
• B) always negative.
• C) positive when exports are greater than imports.
• D) zero.

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Definitions:

Compensating Balances

Minimum balance requirements imposed by banks on certain accounts, which businesses must maintain in order to receive some form of credit or service.

Prompt Payment Discounts

Incentives provided by sellers to encourage buyers to pay their invoices early.

Quantity Discounts

Price reductions offered to buyers purchasing in large volumes.

Collection Expenditures

Expenses associated with collecting payments from customers, including billing, mailing, and legal costs.