Current account deficit are offset by______________?
Correct answer: C. capital/financial account surpluses
- A. merchandise trade deficits
- B. merchandise trade surpluses
- C. capital/financial account surpluses
- D. capital/financial account deficits
Explanation
A current-account deficit means the country spends more abroad than it earns and must be financed by a net inflow of foreign capital. Therefore it is offset by a capital or financial-account surplus.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
Practise Macroeconomics
1,499 free Macroeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Macroeconomics questions
A nation wishing to reduce its current account deficit would be advised to ?
In the calculation of gross domestic product net exports are ?
Purchases of government securities in the United States by foreigners is ?
Debit entries on the balance of payments are the entries that would ?
The current account includes ?
A capital account surplus might be expected to cause a current account deficit because the associated ?