Current account deficits are offset by capital account ________.
A) Assets
B) Revenues
C) Surpluses
D) Imports

Question

Quizplus · Accepted Answer

Capital account surpluses can offset current account deficits. The capital account includes financial flows such as foreign direct investment, portfolio investment, and borrowing. A surplus in the capital account means there is a net inflow of capital, which can finance the current account deficit. Options A, B, and D are incorrect as they do not address the issue of capital account surpluses, which is necessary to offset current account deficits.

Current Account Deficits Are Offset by Capital Account ________