Question

3. Overall balance of payments deficit, when :
a) Overall Balance = 0
c) Reserve Change > 0
b) Overall Balance >
d) Reserve Change < 0​

Answer 1

Answer:

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a)Theoretically, the BOP should be zero, meaning that assets (credits) and liabilities (debits) should balance, but in practice, this is rarely the case. Thus, the BOP can tell the observer if a country has a deficit or a surplus and from which part of the economy the discrepancies are stemming.