When a country has a negative current account, that country is
A) borrowing from the rest of the world.
B) lending to the rest of the world.
C) running a government budget surplus.
D) None of the above is correct.

Question

Quizplus · Accepted Answer

A negative current account indicates that a country is importing more than it is exporting, which means it is spending more on foreign trade than it is earning. To finance this deficit, the country must borrow from other countries or international financial institutions, hence it is borrowing from the rest of the world.

When a Country Has a Negative Current Account, That Country