Question : A country's balance of payments can be in equilibrium when:

Option 1: Its exports equal its imports

Option 2: Its capital inflows equal its capital outflows

Option 3: Its current account balance is zero

Option 4: All of the above

Question : The current account balance is calculated as:

Option 1: Exports minus imports

Option 2: Exports plus imports

Option 3: Imports minus exports

Option 4: Imports plus exports

Question : A decrease in a country's exports is likely to result in:

Option 1: Appreciation of its currency
 

Option 2: Depreciation of its currency
 

Option 3: No impact on its currency

Option 4: A fixed exchange rate

Question : A current account deficit indicates that a country is spending more on __________than it is earning from__________.

Option 1: exports, imports

Option 2: goods, services

Option 3: capital, financial

Option 4: imports, exports

Question : When a country's current account deficit increases, its capital account balance is likely to:

Option 1: Increase

Option 2: Decrease

Option 3: Remain unchanged

Option 4: It is not related to the current account deficit