When there is a current account deficit and the official settlements account equals zero, then
A) exports exceed imports for the country.
B) the country is an exporter of capital.
C) the capital and financial account has a surplus.
D) the country has a budget surplus.

Question

Quizplus · Accepted Answer

When there is a current account deficit and the official settlements account equals zero, it implies that the outflows in the current account are being offset by inflows in the capital and financial account, indicating a surplus in the capital and financial account. This is because the balance of payments is composed of the current account, the capital account, and the financial account, and a deficit in one is typically balanced by a surplus in the others if the official settlements account is balanced.

When There Is a Current Account Deficit and the Official