The Current Account Balance Is Equal to

question 39

Multiple Choice

The current account balance is equal to

• A)Trade balance + services balance - capital account balance.
• B)Trade balance + services balance + capital account balance.
• C)Trade balance + unilateral transfers.
• D)Total payments made by residents of the United States to foreigners plus total payments made by foreigners to residents of the United States.

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Definitions:

Market Adjustment

The process by which market forces of supply and demand determine prices and quantity of goods and services, leading to an equilibrium state.

Price-taker Market

A market situation where individual sellers or buyers have no control over the price of a product, typically seen in perfectly competitive markets.

Long-run Equilibrium

This is a condition where all factors of production and outputs in an economy or market are optimized and can vary to reach a state of general equilibrium.

Price-taker Industry

An industry in which individual firms have no control over the price of their product and must accept the market price set by the forces of supply and demand.