In the financial account, when there is a current account surplus, there must be a(n) _____ in either the capital or the financial account balance.

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The balance of payments is composed of the current account, the capital account, and the financial account. A surplus in the current account implies that a country is exporting more than it is importing, leading to an inflow of funds. To maintain the overall balance of payments, this surplus must be offset by a deficit (outflow of funds) in either the capital account or the financial account, as these accounts record transactions that lead to a net outflow of funds when the current account is in surplus.

In the Financial Account, When There Is a Current Account