If the current account balance shows a surplus,and capital account receipts exceed capital account payments,then the net change in government international reserves must be ________,indicating a(n)________ in U.S.international reserves.

Question

Quizplus · Accepted Answer

If the current account balance shows a surplus, it means that the country's exports exceed its imports. If capital account receipts exceed capital account payments, it means that more money is flowing into the country as investments than flowing out of the country as investments. When there is a surplus in both current and capital accounts, it indicates that there is an overall inflow of foreign currency into the country. This leads to an increase in the government's international reserves, which means that the net change in international reserves is positive. Therefore, the correct answer is A) positive; increase, indicating an increase in U.S. international reserves.

If the Current Account Balance Shows a Surplus,and Capital Account