Consider Canada's balance of payments.Suppose Canada's current account has a surplus of $18 billion in 2013.It follows that Canada must have a capital account ________ of ________,meaning that there is a capital flow of this amount ________ Canada.

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By definition, the current account and capital account must balance each other out in the balance of payments. If the current account has a surplus of $18 billion, this means that Canada's exports exceeded its imports by $18 billion in that year. This also means that there is an excess supply of Canadian dollars in the foreign exchange market. To balance this out, there must be a capital outflow of $18 billion, meaning that foreigners are investing money in Canada or Canadians are investing abroad. Therefore, the capital account must have a deficit of $18 billion to balance out the current account surplus of $18 billion.

Consider Canada's Balance of Payments