Which of the following is true of a current account surplus?
a. A country that is running a current account surplus will have negative net exports.
b. A current account surplus is consistent with domestic spending being in excess of domestic production.
c. A current account surplus means that a country is also running a net surplus in its financial account.
d. A country can have a current account surplus only if it exports more services as compared to goods.
e. A country that is running a current account surplus buys more bonds from the rest of the world as compared to what it sells.
Question 2
When the equation X = GDP - C- I - G yields a negative X, it represents a situation in which the country:
a. experiences runaway inflation.
b. experiences robust GDP growth.
c. experiences a huge budget deficit.
d. borrows to cover the difference between production and spending.
e. lends to cover the difference between production and spending.
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