The meaning behind "the balance of payments must balance" is that
A) a deficit in either the current or capital account must be offset by an equal surplus in the other account.
B) income inflows must equal income outflows.
C) imports always equal exports.
D) net transfers equal the trade balance.

Question

Quizplus · Accepted Answer

The term "balance of payments" refers to the record of all financial transactions between a country and the rest of the world. It includes two main components: the current account, which measures the flow of goods and services between countries, and the capital account, which measures the flow of investment and capital. The principle behind "the balance of payments must balance" is that a deficit in one account (such as the current account) must be offset by a surplus in the other account (such as the capital account) so that the overall balance is zero. This ensures that a country's overall international financial position remains stable.

The Meaning Behind "The Balance of Payments Must Balance" Is