Question

Explain how an economy may face a deficit in its trade in goods yet have a surplus on its current account of the balance of payments.

Answer 1

Explanation:

current account consists of:

visible trade balance (exports-imports)(of goods)

invisible trade balance (exports-imports)(of services)

net income

current transfers(usually remittances)

there might be a deficit in visible trade balance but other components might be rising as well resulting in overall surplus in balance of payments.