If a country has a current account deficit, which one of the following is true? A) Y - (C + I + G) 0 B) S + (G - T) - I

Question

If a country has a current account deficit, which one of the following is true? A) Y - (C + I + G) > 0 B) S + (G - T) - I < 0 C) S < I + (G - T) D) C - Y > 0

Quizplus · Accepted Answer

C) S < I + (G - T) indicates that domestic savings are less than the sum of domestic investment and the government's budget deficit, which can lead to a current account deficit if the country is borrowing from abroad to finance this gap.

If a Country Has a Current Account Deficit, Which One