Why must the Capital Acc. = the Current Acc.?

From: Yurk Yurk (yurkyurkyurk_at_yahoo.com.au)
Date: 02/23/05


Date: Wed, 23 Feb 2005 19:23:03 +1000

I've looked into a number of economics texts and web sites. They give
brief descriptions of the current account and the capital account and then
state that they must be equal. Why?

For example, if Australia imports $A1 million of cars from Japan, that is
clearly a deficit on the current account. What is the equal corresponding
capital account transaction?

Any help greatly appreciated.