Question

Assume that Canada imports more goods and services than it exports. Which of the following is true of the Canadian balance of payments accounts?

(A) The current account balance must be negative.
(B) The current account balance must be positive
(C) The trade balance must be negative.
(D) The financial account (formerly called capital account) balance must be negative
(E) The financial account (formerly called capital account) balance must be positive

Answer 1

(C) The trade balance must be negative.

Step-by-step explanation:

The Balance of trade refers to the net amount payable or receivable

In the case when the net amount is receivable so the balance of trade comes in positive and when the net amount payable is high than the balance of trade is negative.

Now

When the country exports greater than imports so it is a positive balance of Trade and on the other hand When the country imports greater than exports then the balance of trade is negative.