Question

Happyland Happyland, a country of about 48 million people with beautiful beaches, vast natural resources, and a highly skilled labor force, is encouraging foreign direct investment flows. The country has been exporting textiles, computer hardware, and software. The net result of trade is that Happyland exports far more goods and services and receives more income from abroad than it imports and pays abroad.

Looking at Happyland's international trade situation, the country is experiencing a ________.
A. current account deficit.
B. natural resources account surplus.
C. current account surplus.
D. capital account surplus.

Answer 1

The correct answer is option C.

Step-by-step explanation:

Happyland, a country of about 48 million people with beautiful beaches, vast natural resources, and a highly skilled labor force, is encouraging foreign direct investment flows.

The country exports textiles, computer hardware, and software.

The level of foreign trade in this country is such that they export more goods and services than they import.

This means that export earnings are more than their import payments.

So we can say that the country is having a current account surplus as it is receiving more and paying less in the current account.