In a small open economy, if exports equal $5 billion and imports equal $7 billion, then there is a trade and
Net capital outflow.
A)deficit; negative
B)surplus; negative
C)deficit; positive
D)surplus; positive

Question

Quizplus · Accepted Answer

When exports are less than imports, there is a trade deficit. In addition, since there is a net outflow of capital, the net capital outflow is negative. Therefore, the correct choice is A.

In a Small Open Economy, If Exports Equal $5 Billion