Under the simplifying assumptions made in the text, a current account surplus
A) arises when a country's exchange rate rises.
B) arises when the purchase of foreign assets by a nation's citizens exceed the purchase of domestic assets by a nation's citizens.
C) is necessary for a long run economic growth.
D) arises when exports exceed imports.

Question

Quizplus · Accepted Answer

According to the simplifying assumptions made in the text, a current account surplus occurs when exports exceed imports. This is because the current account measures the balance of trade in goods and services, and a surplus occurs when a country earns more from its exports than it spends on imports.

Under the Simplifying Assumptions Made in the Text, a Current