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

Question

Quizplus · Accepted Answer

A negative balance on current account, also known as a trade deficit, means that a country is importing more goods and services than it is exporting. This leads to a net outflow of currency to other countries, which is recorded as a negative on the current account. Conversely, a positive balance on current account, also known as a trade surplus, means that a country is exporting more goods and services than it is importing, leading to a net inflow of currency from other countries. A positive balance on the capital account refers to inflows of investment and assets, while a negative balance indicates outflows.

Which of the Following Statements Is True