Which of the Following Characterizes a Country's Current Account

question 11

Multiple Choice

Which of the following characterizes a country's current account? 

• A) A country's current account deficit has to be financed by both purchases and sales of assets. 
• B) A country experiencing a current account deficit will see its currency appreciate. 
• C) A country's current account balance consists of exports plus imports of merchandise and services minus income on the country's assets abroad. 
• D) A country experiencing a current account surplus will see its currency depreciate.

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Definitions:

Cash Flow from Assets

Represents the total amount of money being transferred in and out of a company's assets, encompassing operating, investing, and financing cash flows.

Operating Cash Flow

The cash generated by a company's normal business operations, indicating whether a company can generate enough positive cash flow to maintain and grow its operations.

Net Working Capital

The financial contrast between a company's short-term assets and its short-term obligations.

Fixed Assets

Long-term tangible assets used in the operation of a business that are not likely to be converted to cash in the short term, such as buildings, machinery, and equipment.