Unit 4.6 · Balance of Payments
Interdependence Between Accounts
AO2
Syllabus Requirement
Understanding the accounting identity: zero sum nature of the BoP where surpluses and deficits are matched.
Assessment Objectives
AO2Application and Analysis
Summary
The interdependence between the accounts in the balance of payments is based on the principle of double-entry accounting. This means that every transaction results in both a credit and a debit, ensuring that the overall balance of payments remains equal over time, as a country can only spend what it earns.