The current account balance plus the capital account balance equals the net change in government international reserves.

Question

Quizplus · Accepted Answer

The current account balance measures the trade and income flows between countries, while the capital account balance measures the financial flows. Together, they represent the net transfer of payments from one country to another. Government international reserves refer to the assets held by a country's central bank that can be used to intervene in the foreign exchange market. Therefore, the net change in government international reserves should be equal to the sum of the current and capital account balances.

The Current Account Balance Plus the Capital Account Balance Equals