Question : A surplus in the current 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 earning more income from its foreign investments than it is paying out
Option 4: Is borrowing more from foreign sources than it is lending
Correct Answer: Is exporting more goods than it is importing
Solution : The correct answer is (a) Is exporting more goods than it is importing.
A surplus in the current account of the Balance of Payments indicates that a country's receipts from exports of goods, services, income from abroad, and unilateral transfers exceed its payments for imports of goods, services, income flowing out, and unilateral transfers. In other words, the country is exporting more goods and services than it is importing, resulting in a positive balance in its current account.
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