Because it provides some indication of what is happening to Canadian claims on foreign wealth and the demand for imports and exports, the ________ is closely followed by economists wanting information on the future movement of exchange rates.

Question

Quizplus · Accepted Answer

The current account balance provides information on the trade balance (exports and imports), net income from foreign investments, and net transfer payments. All of these factors have an impact on the demand for foreign currency and can therefore influence exchange rates. The capital account measures capital flows (such as foreign investment in Canada or Canadian investment abroad), but this does not provide as direct of an indication of exchange rate movements. The statistical discrepancy represents errors or omissions in the data and is not useful for predicting exchange rates.

Because It Provides Some Indication of What Is Happening to Canadian