Question

Assume that the balance-of-payments accounts for a country are recorded correctly. Balance on the current account = BCA = $130 billion Balance on the capital account = BKA = −$86 billion Balance on the reserves account = BRA =?The balance on the reserves account (BRA), under the fixed exchange regime is_______________.

Answer 1

BRA= -$44 billion

Step-by-step explanation:

Balance of payment accounts records all transactions between citizens of a country and citizens of foreign countries. They are made up of the current account, capital account, statistical discrepancy, and reserve account.

In a fixed exchange rate regime the combined balance of capital accounts and current accounts will be the same but opposite in sign.

The formula is:

BCA + BKA= -BRA

130 billion - 86 billion= -BRA

44 billion= -BRA

Multiply through by -1

BRA= -$44 billion