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It is possible for a partner's capital account to increase as a result of the allocation of a loss.

1. true
2. false

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Final answer:

While it is possible for a country to pursue both a trade surplus and a healthy inflow of capital from abroad, the balance requires careful economic management to ensure that the capital inflows are invested wisely and do not disrupt currency stability.

Step-by-step explanation:

The possibility of a country aiming for both a trade surplus and a healthy inflow of capital from abroad is a complex topic in international economics. It is possible, but it involves navigating several economic variables and conditions. For instance, a trade surplus signifies that a country exports more than it imports, which can be indicative of a competitive economy. However, to maintain a stable currency and prevent issues such as capital flight, the inflow of foreign capital should ideally be directed towards investment in real capital rather than financing consumption.

When a country attracts foreign investment, it can lead to a more diversified and robust economy which, in turn, helps in repaying debts and avoiding economic recession. Nonetheless, if a trade surplus becomes too large, it might lead to a decrease in the demand for the country's currency, causing a lower exchange rate. Balancing these outcomes to achieve a sustainable trade surplus alongside a healthy inflow of capital requires nuanced economic policies and international cooperation.

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