When the current account balance and capital account balance of a country are $85 billion and −$80 billion, respectively, the statistical discrepancy equals _____.

Question

Quizplus · Accepted Answer

The statistical discrepancy is calculated as follows: Statistical Discrepancy = Overall Balance of Payments - (Current Account Balance + Capital Account Balance). Plugging in the given values, we get: Statistical Discrepancy = Overall Balance of Payments - ($85 billion + (-$80 billion)) = Overall Balance of Payments + $5 billion. Therefore, if we want the statistical discrepancy to be zero, we need the Overall Balance of Payments to be -$5 billion. Since the Current Account Balance and Capital Account Balance are fixed, the only way to achieve this is to choose the statistical discrepancy equal to -$5 billion.

When the Current Account Balance and Capital Account Balance of a Country