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    Question

    What does a current account deficit indicate about a

    country's economy?
    A It exports more than it imports. Correct Answer Incorrect Answer
    B It is not involved in international trade. Correct Answer Incorrect Answer
    C It imports more goods and services than it exports. Correct Answer Incorrect Answer
    D Its currency is depreciating. Correct Answer Incorrect Answer
    E It has an excess of capital inflows compared to outflows. Correct Answer Incorrect Answer

    Solution

    A current account deficit occurs when a country imports more goods and services than it exports. This indicates that more money is leaving the country for the purchase of imports than is entering from the sale of exports.

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