Question

When receipts on the current account exactly equal payments, the current account is said to be:

Options

• Balanced, with no net lending or borrowing

• In surplus, making the country a net lender

• In surplus on goods but in deficit on invisibles

• In deficit, making the country a net borrower

Answer 1

A Balanced current account satisfies the condition Receipts $=$ Payments. Since receipts exactly match payments, there is no net lending or borrowing with the rest of the world.