Ahmed is working and is spending more than he is earning by using his savings to make up the difference. Which of the following statements is TRUE?

Question

Quizplus · Accepted Answer

Ahmed is in a state of disequilibrium because he is spending more than he is earning and is using his savings to cover the difference. This means that he is not in a stable financial position as he is relying on his previous savings to meet his current expenses. A) is incorrect because equilibrium refers to a state where the inflow of money equals the outflow of money. C) is incorrect because special drawing rights are an international reserve asset and have nothing to do with Ahmed's personal finances. D) is incorrect because Ahmed's personal financial situation does not directly affect the balance of payments, which refers to a country's overall trade and financial transactions with the rest of the world.

Ahmed Is Working and Is Spending More Than He Is