The balance of payments is an accounting identity in which:
A) all accounts must show a surplus
B) a surplus on the capital account is offset by a deficit on the financial and current accounts, assuming the balancing item equals zero
C) a surplus on the current account is offset by a deficit on the financial and capital accounts, assuming the balancing item equals zero
D) all accounts must show a deficit

Question

Quizplus · Accepted Answer

A surplus on the current account must be balanced by a deficit on the financial and capital accounts (or vice versa), assuming no statistical discrepancy, to maintain the accounting identity that the sum of the balances across these accounts equals zero.

The Balance of Payments Is an Accounting Identity in Which