Answer possibilities for first part: Current account deficit = ___ ( s, g, or t)
ID: 1192514 • Letter: A
Question
Answer possibilities for first part:Current account deficit = ___ ( s, g, or t) - ____ (I, g, or t) + _____ (private sector net investment, government deficit, or private sector bet borrowing).
Aa Aa Let G stand for government expenditures, T for taxes, I for private investment, and S for private seving. Complete the following identity for the current account deficit current Account Deficit = ( - )-E Which of the following statements about the current account defict are correct? Check all that apply Using a current account deficit to finance domestic consumption may result in a burden for a nation's economy Decreasing a current account deficit is entirely in the hands of the home nation. A nation's current account deficit can be caused by a net financial inflow. A successful reduction of a nation's current account deficit must be supported by complementary policies in foreign nations with large current account surpluses A current account deficit always causes huge problems for a nation's economy. Which of the following could explain why a current account deficit may stimulate an economy? O Foreign purchases of U.S. securities increase long-term interest rates O Investing in the U.S. involves higher risk and thus requires greater rewards O Increased imports displace workers in import-competing industries O Foreign purchases of American assets can stimulate the U S economy
Explanation / Answer
g-t+private sector net borrowing