Which of the Following Statements About the Balance of Payments

question 46

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:

Opportunity Cost

The expense incurred by not choosing the second-best option available while deciding.

Cash Outlay

The actual amount of money spent or required to be spent on a particular expense, project, or acquisition.

Alternative Investments

Investment assets that do not fall into conventional categories such as stocks, bonds, or cash, including real estate, hedge funds, or commodities.

Differential Revenue

The difference in revenue between two alternatives, often used in decision making to understand the financial impact of different choices.