Question

Assume Canada has a financial account of negative 40 billion Canadian​ dollars, and its capital account is 10 billion Canadian dollars. If there is no statistical​ discrepancy, this implies that​ Canada's current account equals A. negative 30 billion Canadian dollars. B. 30 Canadian dollars. C. 50 billion Canadian dollars. D. negative 50 billion Canadian dollars.

Answer 1

B) 30 BILLION Canadian dollars.

Step-by-step explanation:

The balance of payments (BOP) formula is:

BOP = current account + financial account + capital account + balancing item

BOP always = 0

so if Canada's financial account is -$40 billion, its capital account is $10 billion, and there is no balancing item, then:

0 = current account - $40 billion + $10 billion

current account = $40 billion - $10 billion = $30 billion