Suppose the balance on the current account is +$50 billion and the balance on the capital account is +$1 billion. The balance on the ﬁnancial account is
A) −$51 billion.
B) −$50 billion.
C) −$49 billion.
D) +$51 billion.

Question

Quizplus · Accepted Answer

The balance of payments is divided into three main accounts: the current account, the capital account, and the financial account. The sum of these accounts should theoretically equal zero, as every transaction entered as a credit in one account is entered as a debit in another. Given a +$50 billion balance on the current account and a +$1 billion balance on the capital account, the financial account must balance this out by being −$51 billion.

Suppose the Balance on the Current Account Is +$50 Billion