For Each of the Statements Below, Explain Why the Statement

question 6

Essay

For each of the statements below, explain why the statement is either TRUE or FALSE.
(a) "If a country's income is less than its spending, then the country will have a
surplus in its current account."
(b) "If a country has a merchandise trade deficit, then the country must also have a current account deficit."
(c) "If a country's balance on current account is a net debit of $5,000, then the country's capital/financial account balance (including all government capital/ financial flows as well as all private capital/financial flows) must show a net
capital/financial inflow of $5,000."
(d) "If country A makes a unilateral transfer of $1,000 of goods to country B,
then, in this time period and other things equal, country A's merchandise trade
balance will be $1,000 more positive than would otherwise have been the case.
However, country A's current account balance will be the same as would
otherwise have been the case."