If foreign holdings of Australian dollars decrease, holding all else constant, the:
A)balance on Australia's financial account will decrease.
B)balance on Australia's current account will decrease.
C)balance on Australia's capital account will decrease.
D)Australian balance of trade on goods and services will decrease.

Question

Quizplus · Accepted Answer

When foreign holdings of Australian dollars decrease, it typically means that foreigners are selling their Australian assets or investments, which leads to a decrease in the financial account balance. This is because the financial account tracks the flow of financial assets and liabilities between Australia and the rest of the world.

If Foreign Holdings of Australian Dollars Decrease, Holding All Else