Question 12
Balance of Payments and Exchange RatesA disequilibrium in a country's balance of payment implies
- A.that her imports exceed her exports
- B.an overall deficit or surplus in her current account and capital account
- C.that her capital inflow exceeds her capital outflow
- D.an overall deficit in its trade balance with other countries
- E.that its export earnings exceed the cost of its imports.
Show the answer and explanation
Answer: B (an overall deficit or surplus in her current account and capital account)
Explanation
Balance of payments disequilibrium is any overall deficit or surplus on the current and capital accounts together.