Sia
Question
Microeconomics
Posted 9 months ago
Which of the following statements about the current account is accurate?
Choose 1 answer:
(A) It is not always balanced.
(B) It is always equal to the financial account.
(C) It is always positive.
D It is always negative.
(E) It is always equal to zero.
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Answer from Sia
Posted 9 months ago
Solution
a
Definition of Current Account: The current account is a component of a country's balance of payments that includes the trade balance, net primary income, and net secondary income
b
Not Always Balanced: The current account is not always balanced because it can show a surplus or a deficit depending on the country's economic transactions with the rest of the world
c
Financial Account: The current account is not always equal to the financial account. The financial account records transactions that involve financial assets and liabilities, which can differ from the current account
d
Positivity and Negativity: The current account is not always positive or negative. It can vary based on the country's trade balance and other factors
e
Zero Balance: The current account is not always equal to zero. It can have a surplus or deficit, reflecting the economic activities of the country
Answer
(A) It is not always balanced.
Key Concept
Current Account Balance
Explanation
The current account is a part of the balance of payments that records a country's transactions with the rest of the world. It is not always balanced because it can show a surplus or a deficit depending on the economic activities and transactions.
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