Answer to Question #9607 in Macroeconomics for Kris Tully

Question

Consider the following statement: “China’s current account surplus implies that China has added more to global supply of output than to global demand.” Does a current account surplus necessarily imply the stated outcome for global supply and demand?

Answer 1

As China has current account surplus, it received more money for exported goods and services, that it
payed for imported ones. And as it is the world biggest exporter and one of the
largest importers, so its surplus affects global supply and demand greatly. So a current account surplus necessarily imply the stated outcome for global supply and
demand.