ECONOMICS-W/MYECONLAB
ECONOMICS-W/MYECONLAB
7th Edition
ISBN: 9780134833125
Author: Hubbard
Publisher: PEARSON
Question
Chapter 29, Problem 29.1.1RQ
To determine

The relationship between the current account, financial account and balance of payment.

Expert Solution & Answer
Check Mark

Explanation of Solution

The financial account and current account are the components of the balance of the payment. The sum of the current account and financial account is equal to the balance of the payment, which should be zero to each other that is, if the current account has a deficit balance, the financial account should have a surplus balance.

Economics Concept Introduction

Concept Introduction:

Current account: The current account is the entry of all the transactions of a country net export, net income on investment and net transfers as a part of the balance of payment.

Financial account: The financial account is the book keeping entry of all the transactions such as the purchases of the goods and services from the foreign country.

Balance of payment:  The balance of the payment is the book keeping entry of the trade between two countries goods and services.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
What is the balance on the current account?
How to calculate Balance of trade and the current account ?
How do government budget deficits affect the exchange rate and trade balance?
Knowledge Booster
Recommended textbooks for you
  • Principles of Economics 2e
    Economics
    ISBN:9781947172364
    Author:Steven A. Greenlaw; David Shapiro
    Publisher:OpenStax
    Economics:
    Economics
    ISBN:9781285859460
    Author:BOYES, William
    Publisher:Cengage Learning
    Microeconomics A Contemporary Intro
    Economics
    ISBN:9781285635101
    Author:MCEACHERN
    Publisher:Cengage
  • Economics Today and Tomorrow, Student Edition
    Economics
    ISBN:9780078747663
    Author:McGraw-Hill
    Publisher:Glencoe/McGraw-Hill School Pub Co
    Economics (MindTap Course List)
    Economics
    ISBN:9781337617383
    Author:Roger A. Arnold
    Publisher:Cengage Learning
    Macroeconomics
    Economics
    ISBN:9781337617390
    Author:Roger A. Arnold
    Publisher:Cengage Learning
  • Principles of Economics 2e
    Economics
    ISBN:9781947172364
    Author:Steven A. Greenlaw; David Shapiro
    Publisher:OpenStax
    Economics:
    Economics
    ISBN:9781285859460
    Author:BOYES, William
    Publisher:Cengage Learning
    Microeconomics A Contemporary Intro
    Economics
    ISBN:9781285635101
    Author:MCEACHERN
    Publisher:Cengage
    Economics Today and Tomorrow, Student Edition
    Economics
    ISBN:9780078747663
    Author:McGraw-Hill
    Publisher:Glencoe/McGraw-Hill School Pub Co
    Economics (MindTap Course List)
    Economics
    ISBN:9781337617383
    Author:Roger A. Arnold
    Publisher:Cengage Learning
    Macroeconomics
    Economics
    ISBN:9781337617390
    Author:Roger A. Arnold
    Publisher:Cengage Learning