Which of the following statements is true?
A) A positive balance on capital account is a capital account surplus.
B) A negative balance on capital account is a capital account surplus.
C) A positive balance on capital account is a capital account deficit.
D) A positive balance on capital account means a positive balance on current account.

Question

Quizplus · Accepted Answer

A positive balance on capital account is a capital account surplus because the capital account measures the flow of funds resulting from capital transfers between a country and its foreign counterparts. If a country receives more funds from capital transfers, such as foreign investment, than it sends out, it has a capital account surplus. A negative balance on the capital account would indicate a capital account deficit. Additionally, the current account and capital account are separate accounts and a positive balance on the capital account does not necessarily mean a positive balance on the current account.

Which of the Following Statements Is True