(e) A firm in country A purchases $3,000 of shipping services from a country B ocean...

 

Transcribed Image Text:

(e) A firm in country A purchases $3,000 of shipping services from a country B ocean freight carrier, paying for the services by drawing down bank deposits in B owned by the A firm. (f) A's central bank buys $2,000-worth of foreign currency holdings held in a B commercial bank by an A citizen. The central bank adds the foreign currency to its own commercial bank account in country B. 2- Suppose that you had to explain to a person (who is not an economist) why a current account deficit must be accompanied by a financial or capital account surplus. What would you say? (e) A firm in country A purchases $3,000 of shipping services from a country B ocean freight carrier, paying for the services by drawing down bank deposits in B owned by the A firm. (f) A's central bank buys $2,000-worth of foreign currency holdings held in a B commercial bank by an A citizen. The central bank adds the foreign currency to its own commercial bank account in country B. 2- Suppose that you had to explain to a person (who is not an economist) why a current account deficit must be accompanied by a financial or capital account surplus. What would you say?

Answer rating: 100% (QA)

To explain why a current account deficit must be accompanied by a financial or capital account surplus I would provide the following explanation A cou... View the full answer