Question

In a balance-of-payments record, if the credit and debit offset each other, it means that a nation is in particularly good financial condition

A) True, a balanced record indicates a stable economic situation
B) False, a balanced record does not necessarily reflect financial health
C) Partially true, other factors must be considered for a comprehensive assessment
D) Misleading, offsetting credits and debits may indicate financial instability

Answer 1

A balance-of-payments record where credits and debits offset each other does not necessarily reflect a nation's financial health; other factors must be considered for a comprehensive assessment.

Step-by-step explanation:

In a balance-of-payments record, if the credit and debit offset each other, this situation is described as a balance of zero, meaning the nation is neither a net borrower nor a lender in the international economy. However, this does not necessarily reflect the financial health of a nation. The answer is C) Partially true, other factors must be considered for a comprehensive assessment. Whether a trade balance is good or bad depends on the context of the economy and whether the specific borrowing or lending makes sense given the country's economic conditions. A balanced record is not inherently indicative of stability or instability.