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Author Question: What are the three balance of payments accounts? Briefly describe them. What is the relationship ... (Read 88 times)

michelleunicorn

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on: Jun 29, 2018
What are the three balance of payments accounts? Briefly describe them. What is the relationship among the three?
 
  What will be an ideal response?

Question 2

Pedro's utility of wealth is 6 units for 10,000 and 10 units for 20,000. A friend gave him a lottery ticket for his birthday. The ticket won, giving him either 10,000 with probability 0.5 or 20,000 with probability 0.5.
 
  Pedro's expected utility from the lottery ticket is A) between 6 and 8 units.
  B) equal to 8 units.
  C) between 8 and 10 units.
  D) equal to 10 units.


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Heffejeff

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The three balance of payment accounts are the current account, the capital account, and the official settlements account. The current account records exports, imports, net interest, and net transfers. The capital account records foreign investment in the United States and U.S. investment abroad. Finally, the official settlements account shows changes in U.S. official reserves, the government holdings of foreign currency. The relationship is that the current account balance plus capital account balance plus official settlements account must sum to zero.

Answer to Question 2

B


michelleunicorn

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Reply 2 on: Jun 29, 2018
YES! Correct, THANKS for helping me on my review

FergA

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Reply 3 on: Yesterday
Excellent

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