"If the official settlements balance is zero, a current account surplus must equal the capital account deficit." Is the previous statement correct or incorrect? Briefly explain your answer
What will be an ideal response?
The statement is correct. The sum of the current account balance plus the capital account balance plus the official settlements account must equal zero. If the official settlements account balance is zero, then the sum of the current account balance plus the capital account balance must equal zero. Therefore a current account surplus must be "balanced" by an equally-sized capital account deficit.
You might also like to view...
Use the following table to answer the question below.Alexandra's Production Possibilities ScheduleNatalia's Production Possibilities ScheduleNumber of Scarfs Knitted per dayNumber of Sweaters Knitted per dayNumber of Scarfs Knitted per hourNumber of Sweaters Knitted per hour040433236242916112080If Alexandra were to export a good, which one(s) would she export?
A. Sweaters B. Scarves C. Both sweaters and scarves D. Neither sweaters nor scarves
The characteristic most closely associated with oligopoly is
A. a few large producers. B. easy entry into the industry. C. product standardization. D. no control over price.
People expect an inflation rate of 5 percent and the real interest rate is positive. Consequently the nominal interest rate will be
A) more than 5 percent. B) 5 percent. C) less than 5 percent. D) Without more information it is impossible to tell if the nominal interest rate will be more than, less than, or equal to 5 percent.
The cheapest way to produce a certain amount of output may vary between the short and long-run because:
a. all inputs can be adjusted in the long run. b. all inputs can be adjusted in the short run. c. input prices are fixed in the short run. d. prices increase over the long-run.