A Deficit on the Current Account

question 26

Multiple Choice

A deficit on the current account

• A) normally causes a surplus on the capital and financial account.
• B) normally causes a deficit on the capital and financial account.
• C) has no relationship to the capital and financial account.
• D) means that a nation is making international transfers.

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Definitions:

Current Account Deficits

A situation where a country's total imports of goods, services, and transfers are greater than its total exports, indicating a nation is spending more abroad than it is earning.

Foreign Ownership

The situation where companies or assets are owned by investors or entities based outside the country in which the companies operate or the assets are located.

Net Inflow

The difference between the amount of money or resources entering and leaving a system or economy over a specific period.

Bretton Woods System

A monetary management system that established the rules for commercial and financial relations among the world's major industrial states in the mid-20th century.