Question

if official reserves do not change then we know that the

a. capital account is neg

b. official settlements account balance is pos

C. account balance is neg

d. capital account is pos

e. cap and current acconts must sum to zero

Answer 1

OPTION E CAPITAL AND CURRENT ACCOUNT MUST SUM TO ZERO

EXPLANATION

The official reserve account, a subdivision of the capital account, is the foreign currency and securities held by the government, usually by its central bank, and is used to balance the payments from year to year.The official reserves increases when there is a trade surplus and decreases when there is a deficit.official reserved remain same when BOP is zero .

The current account and the capital account should balance, because every transaction is recorded as both a credit and a debit — double-entry accounting — and since credits must equal debits and the balance of payments is equal to credits minus debits, the sum of the balance of payments statements should be zero.

BOP = Current Account + Capital Account

• = Credits - Debits ≈ 0