Question

If there is a current account surplus, then that means that:

A) imports exceed exports
B) exports exceed imports
C) imports are equivalent to exports
D) capital inflows exceed outflows

Answer 1

A current account surplus means that exports exceed imports, and the country is a net lender to the rest of the world as it exports more capital than it imports.

Step-by-step explanation:

When there is a current account surplus, it indicates that a country's exports exceed imports. This means that the country is selling more goods and services to other countries than it is buying from them. A current account surplus also implies that the country is a net lender to the rest of the world, as it has an overall outflow of financial investment capital with domestic investors putting their funds abroad. This can be contrasted with a current account deficit, where the country would be a net borrower and would experience a net inflow of foreign investment capital from abroad.