The current account in Wakanda is currently balanced.
Which of the following will occur in the balance of payments if Wakanda begins to export more than it imports?

Choose 1 answer:

A It will experience a financial account balance
(B) The current account will move to a surplus
(C) The current account will equal zero
(D) The current account will move to a deficit
(E) The financial account will move to a surplus

Question

The current account in Wakanda is currently balanced.
Which of the following will occur in the balance of payments if Wakanda begins to export more than it imports?

Choose 1 answer:

A It will experience a financial account balance
(B) The current account will move to a surplus
(C) The current account will equal zero
(D) The current account will move to a deficit
(E) The financial account will move to a surplus

Accepted Answer

∻Solution∻ ‖ a ⋮ Current Account Definition: The current account records a country's transactions with the rest of the world, including net trade in goods and services, net earnings on cross-border investments, and net transfer payments. ‖ ‖ b ⋮ Impact of Increased Exports: If Wakanda begins to export more than it imports, the value of its exports will exceed the value of its imports. This will result in a positive net export value. ‖ ‖ c ⋮ Current Account Surplus: A positive net export value means that the current account will move to a surplus, as the country is earning more from its exports than it is spending on imports. ‖ ∻Answer∻ ⚹ (B) The current account will move to a surplus ⚹ ∻Key Concept∻ ⚹ Current Account Surplus ⚹ ∻Explanation∻ ⚹ When a country exports more than it imports, it earns more from its exports than it spends on imports, leading to a surplus in the current account. ⚹◊How does an increase in exports relative to imports affect a country's current account balance according to the microeconomic theory of balance of payments⍭ Generate me a similar question◊

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