Which of the following statements about the balance of payments accounts is CORRECT?
A) The current account must be greater than the capital and financial account.
B) The sum of all three accounts is always zero.
C) The official settlements account is typically larger than both the capital and financial account and the current account.
D) Typically the capital and financial account is near zero because it equals the difference between the current account and the official settlements account.

Question

Quizplus · Accepted Answer

The balance of payments accounts consist of the current account, the capital and financial account, and the official settlements account (also known as the balance of reserves). These accounts record a country's transactions with the rest of the world, and by definition, their sum must always equal zero. This is because every transaction entered as a credit in one account is entered as a debit in another, ensuring that the accounts balance.

Which of the Following Statements About the Balance of Payments