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Posted 2 months ago

Which of the following represents the balance of payments?

Choose 1 answer:
(A) MPCMPS\frac{-M P C}{M P S}
(C) 1MPS\frac{1}{M P S}
(D) 1 reserve requirement \frac{1}{\text { reserve requirement }}
(ㄷ) CA=FAC A=-F A
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Answer from Sia
Posted 2 months ago
Solution by Steps
step 1
Identify the correct representation of the balance of payments. The balance of payments is an accounting record of all monetary transactions between a country and the rest of the world. These transactions include exports and imports of goods and services, financial capital, and financial transfers
step 2
Evaluate the given options. The balance of payments is typically divided into two main accounts: the current account (CA) and the financial account (FA). The current account reflects the net trade in goods and services, as well as earnings on investments and transfers, while the financial account reflects changes in international ownership of assets
step 3
Recognize that the balance of payments must always balance. This means that the current account's surplus or deficit is exactly offset by the financial account's deficit or surplus, respectively. Mathematically, this is represented as CA=FA CA = -FA
Key Concept∻ 
Balance of Payments
The balance of payments is the record of all economic transactions between the residents of a country and the rest of the world in a particular period. It is composed of the current account and the financial account, where the sum of the current account balance and the financial account balance is always zero, represented as CA=FA CA = -FA .

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