True, False or Uncertain: If a country is running a current account deficit, then it is...
Homework Answers
When a country is running current account deficit thus, it means in the economy more money is going out and less money is brought into the economy. The current account can be calculated as follows
CA = (X - M) + NY + NCT
where, X = Total export
M = Total import
NY = net income from abroad
NCT = net current transfer.
When current account deficit is there it means level of export is less than the level of import.
In other words the country is paying more to foreigners and bringing less money from foreign nations.
Thus, the country is investing more abroad than saving at home.
Answer is True.
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