Relationship Between CA Balance & KAFA Balance

Question 1

What do the CA & KAFA add up to?

Answer 1

Zero - Zip - Nothing - Nada - Zilch

Any of the above answers are acceptable

Question 2

An increase in the current account deficit will result in

Answer 2

A rise in the KAFA surplus

Question 3

What play a key role in ensuring balance in the BOP?

Answer 3

The Australian dollar

Question 4

How does the floating exchange rate determine the Balance of Payments (use equation)

Answer 4

Supply of A$ = Demand for A$

Imports + Income Debits + KAFA Debits = Exports + Income Credits + KAFA Credits

(M- X) + (Y Debits - Y Credits) = (K Credits - K Debits)

Deficit on CA = Surplus on KAFA