If a country experiences a decrease in net exports, it is correct to say that its capital and financial account will automatically increase to offset the decline in the current account balance.

When a country has a decrease in net exports, it means that it is selling less to other countries than it is buying from them. This situation negatively affects the current account balance, which records trade in goods and services. To balance this out, the capital and financial account, which tracks investments and loans, usually increases. This happens because the country may need to attract foreign investment or borrow money to make up for the lack of income from exports. For example, if a country imports more cars than it exports, it might encourage foreign companies to invest in local factories to help finance that trade gap.