Question

Which of the following is true about a country with a current account surplus? Select the correct answer below:

a domestic investors are sending their funds abroad
b the country is experiencing a net inflow of financial capital
c the country is a net lender to the rest of the world
d none of the above

Answer 1

A country with a current account surplus is a net lender to the rest of the world, indicating that it has excess savings to lend out and may send funds abroad.

Option c. the country is a net lender to the rest of the world , is the corrrect answer.

Step-by-step explanation:

Which of the following is true about a country with a current account surplus? The correct answer is that the country is a net lender to the rest of the world. A country with a current account surplus implies that it is exporting more than it is importing, leading to a net inflow of funds from foreign countries, and thus has excess savings it can lend out. This condition reflects that domestic investors may also be sending funds abroad as a result of this surplus in finance.