Country X has the following amounts in its balance of payment accounts:

Current Account	Capital Account	Financial Account
$500,000	$100,000	$500,000

1. If Country X residents buy $700,000 of goods and services from foreign countries:
   1. Which account in the balance of payments is affected?
   2. Is this a debit or credit?
   3. What is the new balance in this account?
2. Does this create a surplus or a deficit?
3. Explain one reason why having a persistent current account deficit is a problem