Which of the following statements is true?

Select the correct answer below:

A. Domestic investors will have more financial investment capital when the economy is in a trade surplus.

B. A country is likely not a net borrower from abroad if it has a current account deficit.

C. A negative current account balance means a country is likely a net lender to the rest of the world.

D. Domestic investors will have less financial investment capital when the economy is in a trade surplus.

Question

13-07-2024
Business

Answered

Which of the following statements is true?

Select the correct answer below:

A. Domestic investors will have more financial investment capital when the economy is in a trade surplus.

B. A country is likely not a net borrower from abroad if it has a current account deficit.

C. A negative current account balance means a country is likely a net lender to the rest of the world.

D. Domestic investors will have less financial investment capital when the economy is in a trade surplus.

Answer :

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GinnyAnswer GinnyAnswer · Answer 1 · 2024-07-13T14:49:40-04:00

Final answer:

A current account deficit means a country is a net borrower, while a positive current account balance signifies a net lender to the world. Trade surplus results in an outflow of financial capital for domestic investors.

Explanation:

A current account deficit means that the country is a net borrower from abroad. Conversely, a positive current account balance means a country is a net lender to the rest of the world. When the economy is in a trade surplus, it leads to an outflow of financial investment capital as domestic investors invest abroad.

Learn more about current account deficit, trade surplus, financial investment capital here:

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