Answer (C) is correct. The balance of payments is defined as the excess of imports, private capital outflows, grants, and remittances over exports and private capital inflows. When there is a surplus in the balance of payments, more domestic goods may have been sold abroad than were imported, and/or foreigners may have invested more capital in the domestic country than domestic citizens invested abroad. For this reason, a surplus is considered a favorable balance of payments. Just the opposite is true for a deficit in the balance of payments.