Identify and Distinguish Among, in Balance-Of-Payments Accounting, Various "Balances"that Can

Essay

Identify and distinguish among, in balance-of-payments accounting, various "balances"that can appear in a country's balance-of-payments statement. What must conceptually be the numerical relationship between a country's "balance on current account" (or "current account balance") and its "capital/financial account balance?" Why? Then, for each of the two
statements below, explain why the statement is either True or False.
(a) "A rise in interest rates in a country, such as occurred in the United States
in the early 1980s, can lead to an increased deficit in the country's merchandise trade balance."
(b) "A decrease in saving by households in a country can lead to a deterioration in that country's balance on current account (i.e., can make the current account balance less positive or more negative)."