Which of the Following Statements Is True

question 2

Multiple Choice

Which of the following statements is true?

• A) Current account balance = -(capital account balance).
• B) A country's balance on current account equals its balance on capital account.
• C) If the market for a nation's currency is in equilibrium, a capital account surplus necessarily means a current account surplus.
• D) Capital accounts and current accounts balances are determined by governments.

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Definitions:

Free Trade

The absence of tariffs, quotas, or other government-imposed barriers to international trade, allowing goods to flow freely between countries.

Tariffs

Taxes imposed by a government on imported goods, typically used to protect domestic industries from foreign competition.

Quotas

Restrictions set by governments on the quantity or value of goods that can be imported or exported, used to control trade balances and protect domestic industries.

Infant Industry

A new industry that is in its early stages of development and may be protected or supported by government policies.