The BOP should always balance.

Question

Quizplus · Accepted Answer

It is not necessary for the BOP (Balance of Payments) to always balance. The BOP is a record of a country's economic transactions with the rest of the world, and it consists of two main components: the current account and the capital account. While it is desirable for the BOP to balance in the long run, it is not always possible or necessary for it to be in balance at any given moment. For example, a country may have a temporary deficit in the current account due to increased imports or a decline in exports, but this deficit could be offset by a surplus in the capital account. In addition, some economists argue that a small deficit in the current account can be beneficial for a country, as it allows it to borrow money from abroad and invest in productive assets.

The BOP Should Always Balance