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's gold reserves have increased in value.
B)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.
C)Redland devalued their currency to obtain a more favourable exchange rate.
D)Money inflows from tourism,foreign aid,foreign investment and other sources more than offset Redland's trade deficit.

Question

Quizplus · Accepted Answer

A favourable balance of payments means that the total amount of money coming into the country (from sources such as tourism, foreign aid, and foreign investment) is greater than the total amount of money leaving the country for imports. Therefore, option D is the best answer. Option A is incorrect because there is no information provided about the value of Redland's gold reserves. Option B is also incorrect because the information provided states that Redland reported a favourable balance of payments. Option C is also incorrect because there is no information provided about Redland devaluing their currency.

The Nation of Redland Reported That Their Imports for the Previous