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A country has a current account deficit of $150 million and a capital account su

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Question: A country has a current account deficit of $150 million and a capital account surplus of $100 million. What is the overall balance of payments?

Options:

  1. $50 million surplus
  2. $50 million deficit
  3. $150 million surplus
  4. $150 million deficit

Correct Answer: $50 million deficit

Solution: 

Overall balance of payments = Current account + Capital account = -$150 million + $100 million = -$50 million deficit.

A country has a current account deficit of $150 million and a capital account su

Practice Questions

Q1
A country has a current account deficit of $150 million and a capital account surplus of $100 million. What is the overall balance of payments?
  1. $50 million surplus
  2. $50 million deficit
  3. $150 million surplus
  4. $150 million deficit

Questions & Step-by-Step Solutions

A country has a current account deficit of $150 million and a capital account surplus of $100 million. What is the overall balance of payments?
  • Step 1: Identify the current account deficit, which is given as -$150 million.
  • Step 2: Identify the capital account surplus, which is given as +$100 million.
  • Step 3: Add the current account and capital account together: -$150 million + $100 million.
  • Step 4: Calculate the result: -$150 million + $100 million = -$50 million.
  • Step 5: Interpret the result: The overall balance of payments is a deficit of $50 million.
  • Balance of Payments – The balance of payments is a financial statement that summarizes a country's transactions with the rest of the world, including the current account (trade in goods and services) and the capital account (financial transactions).
  • Current Account Deficit – A current account deficit occurs when a country's total imports of goods, services, and transfers exceed its total exports.
  • Capital Account Surplus – A capital account surplus occurs when a country receives more capital inflows than it sends out, indicating a net inflow of foreign investment.
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