When a country has a current account balance deficit, the country
A) always has a large government budget deficit.
B) is always borrowing from abroad.
C) is always lending abroad.
D) always has a large government budget surplus.
E) is always borrowing from domestic residents.

Question

Quizplus · Accepted Answer

A current account deficit means that the country is importing more goods and services than it is exporting, which requires it to borrow from abroad to finance the deficit. This does not necessarily imply anything about the country's government budget surplus or deficit, or its borrowing from domestic residents.

When a Country Has a Current Account Balance Deficit, the Country