A nation experiences external balance if it achieves:
A) No net changes in its international gold stocks
B) Productivity levels equal to those of its trading partners
C) An increase in its money supply equal to increases overseas
D) Equilibrium in its balance of payments

Question

Quizplus · Accepted Answer

External balance refers to a situation where a nation's balance of payments is in equilibrium, which means there are no significant net inflows or outflows of capital. In this situation, the country is not accumulating large amounts of debt or reducing its foreign reserves to unsustainable levels, which could threaten its long-term economic stability. Therefore, option D is the correct answer.

A Nation Experiences External Balance If It Achieves