Understanding Balance of Payments

What is the primary focus of the current account in the balance of payments?

• Goods and services between countries

• Investment in foreign assets

• Government budgets

• Exchange rates

When a country imports more than it exports, what is this situation called?

• Balanced trade

• Capital surplus

• Trade deficit

• Trade surplus

If the United States has a trade deficit with China, what does China have with the United States?

• Balanced trade

• Capital deficit

• Trade surplus

• Trade deficit

What does the financial account in the balance of payments primarily deal with?

• Trade of goods and services

• Government budgets

• Assets between countries

• Exchange rates

What happens to the financial account when a country has a current account deficit?

• It becomes negative

• It also has a deficit

• It remains balanced

• It has a surplus