When there is a current account deficit and the reserve assets account equals 0, then
A)the country has a budget surplus.
B)exports exceed imports for the country.
C)the country is an exporter of capital.
D)the capital and financial account has a surplus.

Question

Quizplus · Accepted Answer

A current account deficit implies that the country is importing more goods, services, and capital than it is exporting. If the reserve assets account is zero, the deficit must be financed by a surplus in the capital and financial account, indicating that the country is receiving capital inflows.

When There Is a Current Account Deficit and the Reserve