A Country's Balance of Payments Is Sometimes Incorrectly Said to Be

question 47

Multiple Choice

A country's balance of payments is sometimes incorrectly said to be "in surplus". This usually refers to a situation where

• A)credits exceed debits on the capital account only.
• B)the official financing accounts show a decrease in the stocks of official reserves.
• C)total credits exceed total debits.
• D)the government is increasing its holding of foreign- currency reserves.
• E)the official financing account is also in surplus.

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Definitions:

Domestic

Relating to or occurring within a particular country; not foreign or international.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, measuring the benefit consumers receive from a transaction.

Free Trade

The absence of tariffs, duties, or trade barriers that allows for the unrestricted import and export of goods between countries.

Domestic

Pertaining to or produced within a country's borders, often in contrast to foreign or international.