The current account deficits incurred by the United States in the 1990s and early 2000s were caused,in the opinion of many economists,by
A)federal budget deficits.
B)"flight to quality" as foreign investors favored U.S.investments.
C)a sharp decline in private saving.
D)Both B and C are correct.

Question

Quizplus · Accepted Answer

Many economists believe that the current account deficits of the United States in the 1990s and early 2000s were caused by a combination of factors. "Flight to quality" is one of the factors, as foreign investors preferred to invest in the United States, despite the current account deficits. The sharp decline in private savings is also considered an important factor. Therefore, both options B and C are correct. Federal budget deficits are not considered the main cause of these current account deficits.

The Current Account Deficits Incurred by the United States in the 1990s