A nation that has a surplus in its current account:

Question

Quizplus · Accepted Answer

A surplus in the current account means that the country is exporting more goods and services than it is importing, leading to an inflow of foreign currency. This inflow can be used to invest in foreign assets or to pay back loans owed to foreign entities, leading to an increase in the capital account surplus or a decrease in the financial account deficit. Therefore, option C is the correct answer as it correctly identifies the corresponding changes in the financial and capital accounts.

A Nation That Has a Surplus in Its Current Account