Historically, the key role in assisting countries that ran into ...

[skymedlock]

Historically, the key role in assisting countries that ran into financial difficulties was played by
 
  A) Europe. B) Japan.
  C) the IMF. D) the United Nations.

Question 2

If the official settlements balance is zero, a current account surplus implies an equal capital and financial account deficit. Is the previous statement correct or incorrect? Briefly explain your answer.
 
  What will be an ideal response?

[kmb352]

Answer to Question 1

C

Answer to Question 2

The statement is correct. The sum of the current account balance plus the capital and financial account balance plus the official settlements account must equal zero. If the official settlements account balance is zero, then the sum of the current account balance plus the capital and financial account balance must equal zero. Therefore a current account surplus must be balanced by an equally-sized capital and financial account deficit.