Only one of the following statements about trade surplus and capital flow is correct. Which one is it?
Question 1 options:
1)a trade surplus means that there is a net inflow of capital
2)a trade surplus means that there is a net outflow of capital
3)a trade surplus exists if there is a net inflow of capital excluding foreign borrowing and lending
4)a trade surplus exists if there is a net outflow of capital excluding foreign borrowing and lending

Respuesta :

The statement "A trade surplus means that there is a net outflow of capital." is correct. Hence, the suitable option will be option (2).

Give a brief account on trade surplus.

A trade surplus, which happens when an economy's exports surpass its imports, is an economic sign indicating a healthy trade balance. There is a trade surplus when the result of the following calculation is positive:

The trade balance is calculated as Total Value of Exports minus Total Value of Imports.

A trade surplus is when there is a net inflow and the equation above produces a positive result. This is the opposite of a trade deficit. Reports on the trade balance are made available each month by the US Bureau of Economic Analysis (BEA).

An economy's employment and economic growth can be boosted by a trade surplus, but it can also result in higher prices and interest rates.The value of a nation's currency on the international markets can also be impacted by its trade balance because it enables that nation to trade away the majority of its money.

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