Question

If a nation exports fewer goods than it imports, it:

1. experiences an outflow of currency

2. experiences an inflow of currency

3. has a surplus in its current account

4. has a deficit in its current account


a. 1 and 3
b. 1 and 4
c. 2 and 3
d. 2 and 4

Answer 1

Answer:

b. 1 and 4

Explanation:

Current account contains information on a country's trade balance plus net income and direct payments

Export is when a country sells its product to other countries.

Import is when a country buys goods and services from other countries

When import exceeds export it means that the country is spending more than it receives as income from import. Thus, there's a deficit in the current account. A deficit occurs when import exceeds export

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