The nation of Redland reported that their imports for the previous year were $4 billion greater than its exports.During the same period,Redland reported a favourable balance of payments.This information suggests:
A)Redland has made an error in their reporting.The nation must have had a balance of payments deficit since more money flowed out of Redland for imports than flowed into the country for its exports.
B)Redland's gold reserves have increased in value.
C)Money inflows from tourism,foreign aid,foreign investment and other sources more than offset Redland's trade deficit.
D)Redland devalued their currency to obtain a more favourable exchange rate.

Question

Quizplus · Accepted Answer

A favourable balance of payments means that Redland received more money from sources such as tourism, foreign aid, and foreign investment than it spent on imports. This offsets the trade deficit and results in a positive overall balance of payments.

The Nation of Redland Reported That Their Imports for the Previous