A nation experiences external balance if it achieves
A) no net changes in its international gold stocks.
B) productivity levels equal to those of its trading partners.
C) a trade surplus.
D) neither deficits nor surpluses in its current account.

Question

Quizplus · Accepted Answer

External balance is achieved when a nation has neither deficits nor surpluses in its current account. This means that the value of its exports equals the value of its imports. It is important to note that external balance does not necessarily mean that a nation has a trade surplus or productivity levels equal to those of its trading partners, as stated in options C and B respectively. Additionally, option A is not necessarily true as a nation may use gold reserves to finance current account deficits, making changes in its international gold stocks.

A Nation Experiences External Balance If It Achieves