If the Balance on the Current Account Is $842 Billion

question 203

Multiple Choice

If the balance on the current account is $842 billion and the balance on the financial account is -$603 billion,what is the balance on the capital account,assuming no statistical discrepancy?

• A)$1,445 billion
• B)$239 billion
• C)$0
• D)-$239 billion

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Definitions:

Potential Output

Potential output is the maximum amount of goods and services an economy can produce when it is most efficient and fully employed, without causing inflation.

Expansionary Gap

A situation where real GDP exceeds potential GDP, often leading to inflationary pressures due to high demand in an economy.

Equilibrium Output

The level of output where the quantity of goods and services produced equals the quantity of goods and services demanded.

Expansionary Gap

A situation in macroeconomics where the actual output in an economy exceeds the potential output, traditionally leading to inflation.