Q. Consider the following statements:

1. A surplus current account means that the nation is borrower from other countries.
2. Balance of Trade (BoT) is said to be in balance when exports of goods are equal to the imports of goods.

Which of the above is / are correct?
Answer: Only 2
Notes: The first statement is incorrect. A surplus current account means that the nation is a lender to other countries and a deficit current account means that the nation is a borrower from other countries. The second statement is correct as BoT is said to be in balance when exports of goods are equal to the imports of goods. Surplus BoT or Trade surplus will arise if country exports more goods than what it imports.