An improvement in a country's balance of payments means a decrease in its balance of payments deficit, or an increase in its surplus. In fact we know that a surplus in a balance of payments
A) is always beneficial.
B) is usually beneficial.
C) is never harmful.
D) is sometimes harmful.
E) is always harmful.

Question

Quizplus · Accepted Answer

A surplus in a balance of payments can sometimes be harmful because it might indicate an economy is exporting much more than it is importing, which can lead to retaliatory trade measures from other countries, or it might reflect an underconsumption issue within the domestic economy.

An Improvement in a Country's Balance of Payments Means a Decrease