Current account surpluses are offset by
A)the liquidity balances.
B)capital account deficits.
C)unilateral transfers.
D)balance of trade surpluses.

Question

Quizplus · Accepted Answer

Current account surpluses occur when a country earns more from its trade in goods and services than it spends. However, this surplus is offset by a capital account deficit, which occurs when a country invests more abroad than it receives from foreign investors. This is because the balance of payments must always balance, meaning that any excess in one account must be balanced out by a deficit in another. Choices A, C, and D are not correct, as they do not directly offset current account surpluses.

Current Account Surpluses Are Offset by