Finance Problem Set 6 2-4

1. Suppose that each situation listed is the dominant effect on a country’s balance of payments. Indicate by filling in the blank spaces whether the current account and capital account will be in surplus or deficit.

	Current Account Balance	Financial Account Balance
A. a country is a net borrower from the rest of the world
B. a country is repaying past debts
C. a country exports more goods and services than it imports
D. a country sells foreign assets and repatriates the proceeds
E. a country is a net lender to the rest of the world
F. a country earns more income on foreign assets than foreigners earn in its country

International Finance Theory and Policy - Chapter 6: Last Updated on 5 /01/08