The nation of Mainland recently reported that its imports for the previous year were $7 billion greater than its exports. During the same period, the country reported a favorable balance of payments. This information suggests
A) Mainland has misstated information in its report. 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) Mainland's gold and other precious metal reserves increased in value.
C) money inflows from tourism, foreign aid, foreign investment, and other sources more than offset Mainland's trade deficit.
D) Mainland devalued their currency to obtain a more favorable exchange rate.

Question

Quizplus · Accepted Answer

The balance of payments is the difference between money flows into and out of a country from all sources (not just exports and imports). Inflows from other sources (such as tourism or foreign investment) can sometimes offset a balance of trade deficit and result in a favorable balance of payments.

The Nation of Mainland Recently Reported That Its Imports for the Previous