Question

5. Current account deficit Let G stand for government spending, T for taxes, I for private investment, and S for private saving. Complete the following equation for the current account deficit: + Current Account Deficit Which of the following statements about the current account deficit are correct? Check all that apply A successful reduction of a nation's current account deficit must be supported by complementary policies in foreign nations with large current account surpluses 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 finandal inflow A current account deficit always causes huge problems for a nation's economy Which of the following could explain why a current account deficht may stimulate an economy .Cnenine nhavee-ed- earch 5 ПО 12 pouse break prt sc syug delete t & backspace 4 5 6 7 8 E T R Y U L G н J K CV shit B 1P V in LLI

Answer 1

Answer: (5) Current account deficit. >> corrent account deficit = (private sector Net Borrowing) +(Government expenditure) - (Taxes) • Statements correct about current account deficitare; to finance option (B) : using current account deficit for a domestic consumption may result in a burden nation's economy. and Economic expansion may result in large current : account deficit can push corrent and a current account deficit Spending beyond corrent production. • Why a current account deficit may cause unemploy importo displace workers =ment — (B) : Increased Pimport competiting industries