A current account deficit implies that
A)the country is a net lender with the rest of the world.
B)the country is running a net capital account surplus.
C)foreign investment in domestic securities is at very low levels.
D)All of the above.

Question

Quizplus · Accepted Answer

A current account deficit means that a country is importing more than it is exporting, which leads to a net outflow of currency to other countries. This implies that the country needs to finance its deficit by borrowing from other countries, resulting in a net capital account surplus. Therefore, option B is the correct choice. Options A and C are incorrect because they do not necessarily hold true in a situation with a current account deficit.

A Current Account Deficit Implies That