In 2007, Franceʹs exports totaled $490 billion and its imports totaled $529 billion.As a result ,the
i. rest of the world supplies funds to France.
ii. quantity of loanable funds in France is less than the supply.
iii. Ricardo-Barro effect occurs in France.

Question

Quizplus · Accepted Answer

The fact that France's imports are greater than their exports means that they have a current account deficit. This means that they are importing more goods and services than they are exporting, and therefore they require funds from the rest of the world to finance their deficit. This is represented by the first statement, "rest of the world supplies funds to France." The other statements, ii and iii, are not related to this situation.

In 2007, Franceʹs Exports Totaled $490 Billion and Its Imports