Suppose the balance on the current account is +$50 billion and the balance on the capital account is +$1 billion. The balance on the financial account is

A) −$51 billion.
B) −$50 billion.
C) −$49 billion.
D) +$51 billion.

Question

Caitlin Smith · Accepted Answer

Final Answer : A, Explanation :  Under the balance of payments, if the current account and the capital account are both in surplus (positive), the financial account must be in deficit (negative) by an amount that offsets the surpluses, ensuring the total balance of payments is zero. Thus, +$50 billion (current account) + +$1 billion (capital account) = −$51 billion (financial account).

Suppose the balance on the current account is +$50 billion and the balance on the capital account is +$1 billion. The balance on the financial account is

A) −$51 billion.
B) −$50 billion.
C) −$49 billion.
D) +$51 billion.

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Learning Objectives

Related questions

Suppose the balance on the current account is +$50 billion and the balance on the capital account is +$1 billion. The balance on the financial account isA) −$51 billion.B) −$50 billion.C) −$49 billion.D) +$51 billion.

Definitions

Learning Objectives

Learning Objectives

Related questions

Suppose the balance on the current account is +$50 billion and the balance on the capital account is +$1 billion. The balance on the financial account is

A) −$51 billion.
B) −$50 billion.
C) −$49 billion.
D) +$51 billion.