Final answer:
A positive balance in the Capital Account signifies that a country is receiving more foreign investments than it is investing outside. This is distinct from a current account deficit, where the country is borrowing from abroad, and a surplus in the trade balance, indicating an outflow of domestic capital.
Step-by-step explanation:
When considering the Balance of Payments for a country, the Capital Account reflects international transactions that involve the transfer of capital, such as foreign investments. A positive balance in the Capital Account indicates that a country is receiving more investments from abroad than it is making overseas, which is often considered a sign of economic strength.
A current account deficit indicates that a country is a net borrower from the rest of the world, while a positive current account balance means that a country is a net lender. This concept relates to the trade balance, where a surplus would indicate a net outflow of investment capital by domestic investors to foreign markets. In contrast, a current account deficit implies an inflow of foreign investment capital to the domestic economy.
Therefore, the correct answer to the student's question is that a positive balance in the Capital Account of the Balance of Payments of a country indicates that it is receiving more foreign investments than it is making abroad.