A capital account surplus might be expected to cause a current account deficit because the associated ?

A. capital outflow would cause the nation’s currency to depreciate contributing to a trade deficit
B. capital inflow would cause the nation’s currency to depreciate contributing to a trade deficit
C. capital inflow would cause the nation’s currency to appreciate contributing to a trade deficit
D. capital outflow would cause the nation’s currency to appreciate contributing to a trade deficit

Correct Answer: C. capital inflow would cause the nation’s currency to appreciate contributing to a trade deficit ✔

Last Updated: June 18, 2019