Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It indicates that the country is spending more on foreign goods than it is earning from exports.
B
It suggests that the country is earning more from exports than it is spending on foreign goods.
C
It has no significant impact on the country's gross domestic product.
D
It means that the country is experiencing high levels of inflation.
Understanding the Answer
Let's break down why this is correct
Answer
A surplus in the current account means that a country is earning more money from its exports and investments than it is spending on imports. This can be a positive sign for the economy because it indicates that the country is producing goods and services that are in demand internationally. For example, if a country exports a lot of technology products, the income from these sales can be used to invest in infrastructure or education, helping the economy grow. However, a large surplus might also lead to trade tensions with other countries, as they may feel it creates an unfair advantage. Overall, while a current account surplus can strengthen the economy, it must be managed wisely to avoid potential negative consequences.
Detailed Explanation
A surplus means the country sells more goods to other countries than it buys. Other options are incorrect because This option confuses spending with earning; This answer misses the point of how a surplus can boost the economy.
Key Concepts
economic indicators
Topic
Current Account Balance Dynamics
Difficulty
easy level question
Cognitive Level
understand
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