If the current account is in deficit and the capital account is zero,then
A)the financial account must be in surplus.
B)the balance of trade must be in surplus.
C)the balance of payments must be in surplus.
D)there is a capital outflow.
E)the balance of services must be in surplus.

Question

Quizplus · Accepted Answer

In a balance of payments system, a current account deficit means that a country is importing more than it exports in terms of goods and services. This implies a demand for foreign currency, which requires a surplus in the financial account to finance. Therefore, if the capital account is zero, the financial account must be in surplus to cover the current account deficit.

If the Current Account Is in Deficit and the Capital