1. an equal capital account deficit.
2. an increase through time in the country's balance of indebtedness and its net international creditor position.
3. that the sum of the trade account and debt service balances is positive.
4. that all of the above are true.
Choose the correct option.
The correct option is option 4. Since the balance of payments always balances, a current account surplus (deficit) must always be matched by an equivalent capital account deficit (surplus). The current account has two components---the trade account balance, which equals the balance on merchandise trade plus the balance on services other than the direct services of capital, and the debt service balance, which is the county's net receipts of interest and dividends from foreign residents. A current account surplus, and corresponding capital account deficit implies that domestic residents are making net purchases of assets from foreign residents and are thereby lending abroad. This will increase the country's net creditor position.