Economics · Macroeconomics
In an accounting sense, why is it said that the 'Balance of Payments always balances'?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Because global flows of currency are controlled to maintain absolute physical equilibrium.
- 2Because the current and capital accounts include exactly identical items on both debit and credit sides.
- 3Because of the double-entry bookkeeping system, where any deficit in the current account is offset by capital and financial account flows.✓
- 4Because imports of goods and services always match exports.
Correct answer
Because of the double-entry bookkeeping system, where any deficit in the current account is offset by capital and financial account flows.
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