During the last decade, Canada ran large balance of trade surpluses. These trade surpluses imply:
A) a balance of payments deficit.
B) a balance of payments surplus.
C) a balance of payments equilibrium.
D) nothing about the overall balance of payments.

Question

Quizplus · Accepted Answer

A trade surplus indicates that a country exports more than it imports, but it doesn't directly determine the overall balance of payments status. The balance of payments includes not just the trade balance but also financial flows and other transactions. Thus, a trade surplus could coexist with a balance of payments surplus, deficit, or equilibrium, depending on the net effect of all transactions.

During the Last Decade, Canada Ran Large Balance of Trade