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- Subject
- The Balance of Paymentseconomics-mcqs › the-balance-of-payments
- Published
- 27 May 2019
- Last updated
- 28 May 2026
What balances a current account deficit in a country's balance of payments?
Multiple choice question for The Balance of Payments. Select an option, then review the explanation below.
Explanation
A current account deficit occurs when a country imports more goods, services, and transfers than it exports. To finance this deficit, there must be a corresponding surplus in the capital or financial account, which includes investments and loans from abroad. Therefore, capital/financial account surpluses offset current account deficits.
More The Balance of Payments MCQs
Practice related questions from the same subject.
- 1.Which of the following statements about the balance of payments is accurate?
- 2.What term describes the difference between a nation's exports and imports of goods?
- 3.What is required to reconcile discrepancies in the balance of payments accounts?
- 4.What does the balance of trade specifically measure?
- 5.Which economic pattern is commonly observed in countries during the initial phases of rapid economic growth?