Suppose a Country's Official Reserves Do Not Change

question 121

Multiple Choice

Suppose a country's official reserves do not change.If it has a $20 billion deficit in its current account,then it must also have a $20 billion:

• A) surplus in its balance of payments.
• B) deficit in its balance of payments.
• C) surplus in its capital account.
• D) deficit in its capital account.

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Definitions:

Classified Balance Sheet

A balance sheet that organizes assets and liabilities into subcategories for clarity.

Intangible Assets

Assets that cannot be physically touched or held, such as patents, trademarks, and goodwill.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against an asset since it was placed in service, reflecting its loss of value over time.

Property Plant

Property, Plant, and Equipment (PP&E) are fixed assets including buildings, machinery, and equipment that are owned and used by a company for operations and not for immediate sale.