The nation of Redland reported that its imports for the previous year were $4 billion greater than its exports. During the same period, Redland reported a favorable balance of payments. This information suggests:
A) Redland has made an error in their reporting. The nation must have had a balance of payments deficit since more money flowed out of Redland for imports than flowed into the country for its exports.
B) Redland's gold reserves have increased in value.
C) money inflows from tourism, foreign aid, foreign investment and other sources more than offset Redland's trade deficit.
D) Redland devalued their currency to obtain a more favorable exchange rate.

Question

Quizplus · Accepted Answer

Redland's favorable balance of payments suggests that inflows from sources such as tourism, foreign aid, foreign investment, and remittances more than offset the trade deficit caused by imports being $4 billion greater than exports.

The Nation of Redland Reported That Its Imports for the Previous