Which of the following refers to a situation where a nation is spending more on foreign goods than it is earning from its own exports?

When a nation is spending more on foreign goods than it is earning from its exports, it indicates that its total imports exceed its total exports. This situation is described as a current account deficit. The current account is a part of a country's balance of payments, which records transactions related to trade, income, and current transfers. A current account deficit reflects an import-heavy economy, meaning the country is consuming more foreign goods and services than it produces domestically.

This deficit can arise from various factors, such as higher demand for foreign products, a competitive disadvantage in exports, or economic policies favoring imports over domestic production. Although temporary current account deficits can be sustainable or beneficial for growth, persistent deficits may raise concerns about a country’s foreign exchange reserves, currency stability, and long-term economic sustainability.

In contrast, trade surpluses indicate that a country sells more to the rest of the world than it buys, capital account surpluses relate to financial and investment transactions rather than trade, and balance of trade equilibrium refers to a situation where exports and imports are equal, none of which fit the described situation of exceeding imports over exports.