The sum of the capital account and the official reserves account must exactly equal the balance in the current account.

Question

Quizplus · Accepted Answer

This is known as the fundamental balance of payments equation, which states that the sum of the current account, capital account, and official reserves account must equal zero, as they represent all international transactions. However, in practice, there may be small discrepancies due to measurement errors and statistical discrepancies.

The Sum of the Capital Account and the Official Reserves