Question

The Capital Account is said to be balanced when:

Options

• Capital inflows are zero

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

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

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

Answer 1

A balanced Capital Account occurs when \[\text{Capital inflows} = \text{Capital outflows}\]. A surplus arises when inflows exceed outflows, and a deficit arises when inflows fall short of outflows.