Question : A surplus in the capital account of the Balance of Payments indicates that a country:
Option 1: Is exporting more goods than it is importing
Option 2: Is receiving more foreign aid than it is providing
Option 3: Is borrowing more from foreign sources than it is lending
Option 4: Is earning more income from its foreign investments than it is paying out
Correct Answer: Is borrowing more from foreign sources than it is lending
Solution : The correct answer is c) Is borrowing more from foreign sources than it is lending.
A surplus in the capital account of the Balance of Payments indicates that a country is borrowing more from foreign sources than it is lending. It means that the country is receiving a net inflow of capital from foreign borrowing and lending activities.
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