Question

A surplus in the Capital Account occurs when:

Options

• \[\text{Capital inflows} > \text{Capital outflows}\]

• \[\text{Capital inflows} = \text{Capital outflows}\]

• \[\text{Capital inflows} < \text{Capital outflows}\]

• \[\text{Capital inflows} + \text{Capital outflows} = 0\]

Answer 1

A surplus occurs when \[\text{Capital inflows} > \text{Capital outflows}\]. Inflows such as receiving loans from abroad and selling assets to foreigners exceed outflows like repaying loans and purchasing foreign assets.