The Balance of Payments Identity Is Given by BCA

question 19

Multiple Choice

The balance of payments identity is given by BCA + BKA + BRA = 0.Rearrange the identity for a country with a pure flexible exchange rate regime.

• A)BCA + BKA + BRA = 0
• B)BCA = −BKA
• C)BCA + BKA = −BRA
• D)BRA = −BCA

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Definitions:

Consumption Per Person

A measure of the average amount of goods and services consumed by each person within a specific population.

World Commodity Prices

The prices at which basic products, which are traded globally, are sold and bought in the international markets.

Short Run

(1) In microeconomics, a period of time in which producers are able to change the quantities of some but not all of the resources they employ; a period in which some resources (usually plant) are fixed and some are variable. (2) In macroeconomics, a period in which nominal wages and other input prices do not change in response to a change in the price level.

Long Run

In microeconomics, a period of time long enough to enable producers of a product to change the quantities of all the resources they employ, so that all resources and costs are variable and no resources or costs are fixed. In macroeconomics, a period sufficiently long for nominal wages and other input prices to change in response to a change in a nation’s price level.