Use the following terms and determine which of the following choices is wrong? Balance of current account (CA)
Balance in capital account (KA)
Change in official international reserves (?OR)
A) If CA is -5 and KA is +3, then ?OR is -2.
B) CA + KA - ?OR = zero.
C) If CA is +5 and KA is -3, then ?OR is +2.
D) If CA is +5 and KA is -3, then the balance of payment can be positive, negative or zero.

Question

Quizplus · Accepted Answer

The balance of payments must always balance, meaning CA + KA - ?OR = 0. Therefore, if CA is +5 and KA is -3, ?OR must be -2 to balance the equation, making the balance of payments zero, not positive or negative.

Use the Following Terms and Determine Which of the Following