A country that exports less than it imports will:
A) have a current account deficit and a capital account deficit.
B) have a current account surplus and a capital account deficit.
C) have a current account surplus and a capital account surplus.
D) have a current account deficit and a capital account surplus.

Question

Quizplus · Accepted Answer

When a country exports less than it imports, it means it is buying more goods and services from other countries than it is selling to them. This leads to a current account deficit, as the country is importing more than it is exporting. However, to pay for these imports, the country must attract more capital from foreign investors than it is investing abroad, leading to a capital account surplus. Therefore, the correct option is D - a current account deficit and a capital account surplus.

A Country That Exports Less Than It Imports Will