If a Nation's Balance on Current Account Is a Negative

question 52

Multiple Choice

If a nation's balance on current account is a negative $20 billion, while its balance on capital account is a positive $16.5 billion, we can conclude with certainty that this nation is experiencing:

• A)a merchandise trade deficit.
• B)a merchandise trade surplus.
• C)a reduction in its stock of foreign currency.
• D)a balance of payments surplus.

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Definitions:

Gain or Loss

The financial result from selling an asset for more (gain) or less (loss) than its purchase price, important for tax calculations related to capital gains and losses.

Section 1231 Property

Property related to the business or trade, the sale of which may result in ordinary income or capital gains treatment depending on the specifics of the transaction.

Trade or Business

Activities conducted for the purpose of income or profit, engaged in consistently and regularly to qualify as deductible business expenses.

Copyright

Legal protection given to creators of original works, including the right to copy, distribute, and adapt the creation.