A balance of payments deficit is associated with a ________ of international reserves,while a balance of payments surplus is associated with a ________.

Question

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A balance of payments deficit means that a country is spending more on imports and payments to other countries than it is receiving from exports and payments from other countries. This results in a loss of international reserves as the country has to use its reserves to make up for the deficit. On the other hand, a balance of payments surplus means that a country is receiving more from exports and payments from other countries than it is spending on imports and payments to other countries. This results in a gain of international reserves as the country has more money coming in than going out.

A Balance of Payments Deficit Is Associated with a ________