A country with a current account surplus
A)acquires IOUs from foreigners, thereby increasing its net foreign wealth.
B)must borrow from foreigners or draw down on its previously accumulated foreign wealth.
C)will experience a reduction in the country's net foreign wealth.
D)both b and c

Question

Quizplus · Accepted Answer

A country with a current account surplus means it is exporting more goods and services than it is importing. This leads to an inflow of foreign currency, which the country can use to acquire IOUs (such as bonds or stocks) from foreigners. This increases the country's net foreign wealth.

A Country with a Current Account Surplus