Since total inflows and outflows must be equal on a balance of payments statement, if the capital and financial account balance is positive, then the current account balance is:

Question

Quizplus · Accepted Answer

When the capital and financial account balance is positive, it means more capital is flowing into a country than out. To balance this, the current account (which includes trade balances, net income from abroad, and net current transfers) must be negative, as the balance of payments is a zero-sum statement where a surplus in one account is balanced by a deficit in another.

Since Total Inflows and Outflows Must Be Equal on a Balance