For most of the past twenty years, China has maintained a large _______ balance
ID: 1116937 • Letter: F
Question
For most of the past twenty years, China has maintained a large _______ balance on its current account, that has largely been countered by a large negative balance on its _____________.
negative; trade balance.
negative; capital/financial account.
positive; official reserves transactions (official settlements balance).
positive; capital/financial account.
negative; trade balance.
negative; capital/financial account.
positive; official reserves transactions (official settlements balance).
positive; capital/financial account.
Explanation / Answer
The current account and the capital account are the two main components of a nation’s balance of payments.
The deficit or surplus either in current account or capital account adjust each other and helps to keep the nation balance of payment in balance.
Balance of payment = current account +capital account
Therefore it can be said that for most of the past twenty years, China has maintained a large positive balance on its current account, that has largely been countered by a large negative balance on its capital/financial account.
Hence option fourth is the correct answer.
Option fourth is; positive; capital/financial account.
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