Unlike the trade balance of exports and imports,the balance of payments equilibrium has a zero balance at all times.

Question

Quizplus · Accepted Answer

The balance of payments is a comprehensive statement of a country's economic transactions with the rest of the world over a given period. It includes not only trade in goods and services (i.e., the current account) but also capital flows (i.e., the capital and financial account) and certain non-monetary items. The balance of payments is always in equilibrium because every international transaction generates an equal and opposite entry in the balance of payments. In other words, for every credit, there must be a debit. As a result, the overall balance of payments must sum to zero. Therefore, the statement "the balance of payments equilibrium has a zero balance at all times" is true.

Unlike the Trade Balance of Exports and Imports,the Balance of Payments