A country experiencing a current account surplus:

Question

BlackTom AI · Accepted Answer

A current account surplus means the country exports more goods, services, income receipts and transfers than it imports, so it is a net provider of funds to the rest of the world.

1) Relevant concepts
- Current account (CA): exports − imports of goods and services + net primary income + net secondary income. 
- National saving and investment identity: CA = S − I (where S is national saving, I is domestic investment). 
- Balance-of-payments double-entry: CA + Financial Account (FA) + Capital Account ≈ 0 (using standard sign conventions, a CA surplus implies a net capital/financial outflow).

2) Step-by-step reasoning
- If CA > 0, then by CA = S − I we have S > I: the country saves more than it invests domestically.
- The excess saving must be used somewhere; in the international accounts it appears as net purchases of foreign assets (financial outflow).
- In balance-of-payments terms, a CA surplus is offset by a negative FA (net capital outflow), meaning the country is lending abroad.

3) Numerical intermediate steps (illustrative)
- Suppose exports − imports = 40, net income receipts = 10, net transfers = 5 → CA = 40 + 10 + 5 = 55 (surplus).
- Then S − I = 55 → excess saving 55.
- The financial account records −55 (net capital outflow): domestic residents buy 55 of foreign assets (i.e., lend 55 abroad).

4) Why the correct answer is correct
Because a current account surplus indicates net lending to foreigners: the country’s residents supply more funds internationally than they borrow, so the country is able to lend internationally.

5) Why the other options are incorrect
- "Spent more than it earned..." describes a current account deficit, not a surplus. 
- "Must also have had a surplus in its capital account." Incorrect because the capital/financial account typically offsets the current account; a CA surplus usually corresponds to a capital/financial account deficit (net outflow), not a surplus. 
- "Needs to borrow internationally." Opposite of the truth: with a surplus the country is a net lender, not a borrower.

6) Conclusion
The correct choice is “is able to lend internationally,” which matches the provided answer.

A country experiencing a current account surplus:单项选择题

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