Question

if the financial account balance must exactly offset the current account balance, why do government accounts...

if the financial account balance must exactly offset the current account balance, why do government accounts bother to record the financial account?

Homework Answers

Answer #1

The financial account and the current account consist of different items in the books. The current account consists of exports and imports which make up the balance of trade and the financial account contains capital inflows and outflows in the form of foreign direct investments. Thus the current account and capital account occupy very different items and hence are analyzed separately. The current account looks at the trade of goods and services while the capital account looks at financial flows. The balance on capital account must cancel out that on the current account.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
if the financial account balance must exactly offset the current account balance, why do government accounts...
if the financial account balance must exactly offset the current account balance, why do government accounts bother to record the financial account?
if the financial account balance must exactly offset the current account balance, why do government accounts...
if the financial account balance must exactly offset the current account balance, why do government accounts bother to record the financial account?
If the financial account balance does not exactly offset the current account in balance. Which types...
If the financial account balance does not exactly offset the current account in balance. Which types of recording brings the balance of payment into balance? and How does direct foreign investment affect both the financial account and the current account over times?
Describe the components of the Balance of Payments. a. Why do the Current Account and Financial...
Describe the components of the Balance of Payments. a. Why do the Current Account and Financial Accounts must balance? Use the case of China and the United State to make your case.
Balance of Payments Accounts National Income and Product Accounts Current account 100 GNE 750 Capital account...
Balance of Payments Accounts National Income and Product Accounts Current account 100 GNE 750 Capital account 20 Consumption 550 Net factor income from abroad 30 Government purchases 50 Net unilateral transfers 10 Government saving 40 What is the value of financial account? What is the value of investment? What is the value of trade balance? What is the value of GNDI? What is the value of national saving? What is the value of private saving? [6 points] Assume that citizens...
Why must a country with a current account surplus always have a financial account deficit? Please...
Why must a country with a current account surplus always have a financial account deficit? Please give an explanation.
Why must a country with a current account surplus always have a financial account deficit? Please...
Why must a country with a current account surplus always have a financial account deficit? Please give an explanation.
2. Current, financial, and capital accounts Consider the following table showing hypothetical balance-of-payments data for the...
2. Current, financial, and capital accounts Consider the following table showing hypothetical balance-of-payments data for the United States. Complete the table by selecting the correct value for each missing entry. Balance-of-Payments (Billions of dollars) Current Account U.S. merchandise exports +65 U.S. merchandise imports -68 Merchandise trade balance -3 U.S. service exports +30 U.S. service imports -65    Services balance -35 Goods and services balance -38 Net investment income from abroad -2 Net unilateral transfers -5 Current account balance -45   ...
Why don't you just show the net balance of accounts receivable? Why bother showing the deduction...
Why don't you just show the net balance of accounts receivable? Why bother showing the deduction of the allowance account on the balance sheet?
Question Set 5: Current and Financial Account The table below details current transactions and payments accounts...
Question Set 5: Current and Financial Account The table below details current transactions and payments accounts categories: Transaction Current/Financial Account Increase/Decrease A Chinese company buys equipment produced in the United States. A citizen of Canada donates $1000 to victims of Tropic Storm Cindy. A U.S. citizen buys Boursin cheese produced in France. A Mexican citizen buys 100 shares of Micron stock. U.S. investors buy a golf course in Ireland. Consider each of the transactions above and do the following: Identify...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT