A balance of payments ________ is associated with a loss of international reserves,while a balance of payments ________ is associated with a gain.

Question

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A balance of payments deficit is associated with a loss of international reserves because the country is spending more money on imports and foreign investments than it is receiving from exports and foreign investments. This leads to a decrease in the country's foreign currency reserves. Conversely, a balance of payments surplus is associated with a gain in international reserves because the country is receiving more money from exports and foreign investments than it is spending on imports and foreign investments. This leads to an increase in the country's foreign currency reserves.

A Balance of Payments ________ Is Associated with a Loss