Suppose Canada has a zero balance (no surplus or deficit) on the both the current account and on the capital account. Then Canadian businesses import new machinery from Italy, financing that increase by borrowing from Japan. On Canada's balance of payments accounts there is now a current account

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Importing machinery from Italy increases the current account deficit because it counts as an import of goods. Borrowing from Japan to finance this purchase increases the financial account (previously known as the capital account in some contexts), reflecting an inflow of capital to finance the deficit.

Suppose Canada Has a Zero Balance (No Surplus or Deficit)