Which of the following best describes the results when a nation's current account balance is negative?

Select the correct answer below:

A. The trade balance is zero
B. The nation is a net lender
C. The nation is neither a net borrower nor lender
D. The nation is a net borrower

Question

13-07-2024
Social Studies

Answered

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Which of the following best describes the results when a nation's current account balance is negative?

Select the correct answer below:

A. The trade balance is zero
B. The nation is a net lender
C. The nation is neither a net borrower nor lender
D. The nation is a net borrower

Sagot :

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GinnyAnswer GinnyAnswer · Answer 1 · 2024-07-13T14:47:23-04:00

Final answer:

A negative current account balance indicates a nation is a net borrower from abroad or a country imports more goods/services than it exports.

Explanation:

A negative current account balance indicates that the nation is a net borrower from abroad. This means that the country is importing more goods and services than it is exporting, leading to a deficit in the current account.

Conversely, a positive current account balance signifies that the nation is a net lender to the rest of the world, indicating an excess of exports over imports.

It's important to note that the fundamental economic question is not whether a nation's economy is borrowing or lending but whether the borrowing or lending aligns with the economic conditions of that country.

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