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A balance-of-payments statement includes three accounts. Two of those accounts are the current account and the capital account. What is the third account found on the balance-of-payments statement?

User Dedra
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Final Answer:

The third account found on the balance-of-payments statement is the financial account.

Explanation

The balance-of-payments statement encompasses three fundamental accounts: the current account, the capital account, and the financial account. The financial account records transactions involving financial assets and liabilities between a country and the rest of the world.

It tracks investments, purchases of stocks and bonds, direct investments like foreign direct investment (FDI), and changes in reserve assets held by a country's central bank. Essentially, it provides insight into the flow of funds across borders, offering a comprehensive view of a nation's economic interactions globally.

The financial account is crucial for understanding the financial health of a country, as it sheds light on how a nation is funding its deficits or surpluses. It showcases the inflow and outflow of capital, indicating whether a country is attracting investments or facing capital flight.

Understanding the financial account assists policymakers in making informed decisions regarding fiscal and monetary policies to manage economic stability and growth.

User Prasad
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