A country's annual balance of payments statement must always balance because:
A)a nation's imports are limited to the value of its exports.
B)a trade deficit must be matched by an equal surplus of investment income.
C)all international transactions must be settled in one way or another.
D)a nation's exports will be limited by the dollar value of its imports.

Question

Quizplus · Accepted Answer

A country's balance of payments statement reflects all international transactions that occur during a specific time period, including payments for imports and receipts for exports, as well as financial investments and transfers of capital. These transactions must balance because they all affect the country's overall balance of payments. This means that any deficit or surplus must be accounted for in some way, such as through foreign reserves, loans, or other financial transactions. In other words, all international transactions must be settled in one way or another, to ensure that the balance of payments statement balances.

A Country's Annual Balance of Payments Statement Must Always Balance