Which of the Following Statements About the Balance of Payments

question 176

Multiple Choice

Which of the following statements about the balance of payments accounts is CORRECT?

• A) The current account must be greater than the capital and financial account.
• B) The sum of all three accounts is always zero.
• C) The official settlements account is typically larger than both the capital and financial account and the current account.
• D) Typically the capital and financial account is near zero because it equals the difference between the current account and the official settlements account.

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Definitions:

Trade Deficit

The economic condition that occurs when a country imports more goods and services than it exports.

Net Exports

The net amount obtained by subtracting a nation's total imports from its total exports.

Imports

Goods or services brought into one country from another for the purpose of being sold or used, contributing to the domestic supply of products.

Trade Deficit

Occurs when a country's imports of goods and services exceed its exports, leading to a negative balance of trade.