Other things being equal, an increase in the current account deficit could result from

Question

Quizplus · Accepted Answer

An increase in domestic investment would require more funding from abroad, which would increase the current account deficit. The other options would not have a direct impact on the current account deficit. A fall in the government's budget deficit or a rise in the budget surplus would only affect the capital account balance, not the current account balance. An increase in private saving could lead to a decrease in domestic investment, but this would not necessarily result in an increase in the current account deficit.

Other Things Being Equal, an Increase in the Current Account