In part, a country's current account measures
A) its current debt as opposed to its long-term debt.
B) borrowing and lending activity between the country's residents and foreigners.
C) net increases and decreases in a country's holdings of foreign currency.
D) receipts from the sale of goods and services to foreigners and payments for goods and services bought from foreigners.

Question

Quizplus · Accepted Answer

The current account primarily measures the flow of goods and services between a country and the rest of the world, including exports and imports, thus D is correct. It does not directly measure debt (A), borrowing and lending activities in isolation (B), or changes in foreign currency holdings (C), although these can be related to or affect the current account balance.

In Part, a Country's Current Account Measures