The current account balance does NOT equal:

Question

Quizplus · Accepted Answer

The current account balance represents the difference between a country's total exports and total imports of goods and services, plus net income (such as interest and dividends) and net transfers (such as foreign aid). It does not depend on government saving and investment, so option D is incorrect. Option A is incorrect because it represents the relationship between GDP and domestic spending, which is a different concept. Option C is incorrect because it represents the difference between outward and inward foreign investment, which is also not the same as the current account balance. Only option B represents the correct relationship, as the current account balance is equal to the difference between national saving and domestic investment.

The Current Account Balance Does NOT Equal