Why is the balance of payments always zero?
What will be an ideal response?
If a country spends more on goods and services and other items in the current account than it receives, it must have received the income needed to buy those items from investments from foreigners. In other words, a current account deficit must be offset by a surplus in the financial account. Apart from measurement errors, the sum of the current account and the financial account must equal zero. Therefore, the balance of payments must also equal zero.
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According to your authors, America's Great Depression of the 1930s was evidence of
A) an unstable free market system B) rampant greed among entrepreneurs. C) a cluster or accumulation of errors. D) antagonistic interests among the propertied and nonpropertied classes. E) all of the above.
Greenwood and Yorukoglu view the post-1973 productivity slowdown as resulting from
A) the information technology revolution. B) high oil prices. C) measurement errors. D) technological depletion.