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Question

Explain how a country could have a trade in goods surplus but a deficit on the current account on the balance of payments.

Quick Answer:

Trade in goods surplus means exports (of goods) exceeds imports (of goods). Trade in goods is only one part of the current account such as the balance on investment income and the balance on current transfers

There could be a larger deficit on the trade in services balance. For example of a service item decreasing

There can be a larger deficit on income (primary) balance for example of an income item increasing

There could be a larger deficit on current transfers (secondary) balance for example of a current transfer item decreasing

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