A country's exports are $490 billion and its imports are $529 billion.Choose the correct statement.
I.The country is a net foreign borrower.
II.The Ricardo-Barro effect holds in this country.
III.This country does not have an equilibrium in its loanable funds market.

Question

Quizplus · Accepted Answer

The country has a current account deficit (exports < imports), which means it is a net foreign borrower, so statement I is correct. The Ricardo-Barro effect and loanable funds market equilibrium are not relevant to this particular scenario, so statements II and III are incorrect.

A Country's Exports Are $490 Billion and Its Imports Are