A deficit in a country's current account means that:
A) the country is running a net deficit in its financial account.
B) the country is a net lender to the rest of the world.
C) the country is running a net surplus in its financial account.
D) the country will have a positive value of net exports.
E) the domestic production is in excess of domestic spending.

Question

Quizplus · Accepted Answer

A deficit in the current account means that a country is importing more goods and services than it is exporting, leading to a net outflow of funds. This deficit in the current account is typically offset by a surplus in the financial account, as the country borrows funds from abroad to finance its current account deficit. This means that the country is running a net surplus in its financial account.

A Deficit in a Country's Current Account Means That