ABSTRACT
We begin with a discussion of the national and international accounts and their relation, because this seems the best introduction to the subject of balance-of-payments adjustment and balance-of-payments problems. To understand the national income accounts of a closed economy, one must start with the Keynesian identity between total receipts and total payments. The flow of total receipts equals the flow of total payments, because they are the same transactions looked at from different people's points of view. One person's payments are necessarily some other person's (or persons') receipts; and when all the people who make payments and all those who receive them belong to the same closed economy, the sum total of everybody's payments must necessarily equal the sum total of everybody's receipts.
