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

Question

Quizplus · Accepted Answer

When the current account is in surplus and the capital account is zero, it implies that the country is exporting more than it is importing, leading to an inflow of foreign currency. Since the balance of payments (which includes the current account, capital account, and financial account) must always balance, a surplus in the current account with a zero capital account means the financial account must be in deficit, reflecting an outflow of financial assets to balance the inflow from the current account surplus.

If the Current Account Is in Surplus and the Capital