Current v Capital Account

hey @pcunniff , so if imports exceed exports, we know that it has to be a current account deficit, i.e. Answer A can be eliminated.

Since Balance of Trade (BOT) is a combination of a country’s good and services, we don’t have sufficient info in the question to conclude whether the BOT is a surplus or deficit, because the question only stated merchandise and we don’t have enough info about other sub-components of current account.

But because the balance of payments has to balance, i.e. the balances of these 3 components must sum to zero (current account, capital account and financial account). A deficit in one area implies an offsetting surplus in other areas. A current-account deficit implies a capital-account surplus (and vice versa).