Suppose Canada Has a Zero Balance (No Surplus or Deficit)

Multiple Choice

Suppose Canada has a zero balance (no surplus or deficit) on the both the current account and on the capital account. Then Canadian businesses import new machinery from Italy, financing that increase by borrowing from Japan. On Canada's balance of payments accounts there is now a current account

A) surplus and a financial account surplus.
B) surplus and a financial account deficit.
C) deficit and a financial account surplus.
D) deficit and a financial account deficit.
E) surplus and a financial account balance of zero.