Consider a country's balance of payments.Other things being equal,an increase in the current account deficit could result from

Question

Quizplus · Accepted Answer

A current account deficit means that a country is importing more goods and services than it is exporting. Domestic investment refers to the amount of money that is being put into the country's economy, and if it increases, it is likely that the demand for imports will also increase, leading to a higher current account deficit. An increase in private saving (choice A) would lead to a decrease in spending and potentially a decrease in imports, which would reduce the current account deficit. A fall in domestic investment (choice B) would also lead to a reduction in imports, which would reduce the current account deficit. A fall in the government's budget deficit (choice D) or a rise in the government's budget surplus (choice E) would not have a direct impact on the current account deficit.

Consider a Country's Balance of Payments