Concerning a country's business cycle, rapid growth of production and employment is commonly associated with
A) large or growing trade deficits and current account deficits.
B) large or growing trade deficits and current account surpluses.
C) small or shrinking trade deficits and current account deficits.
D) small or shrinking trade deficits and current account surpluses.

Question

Quizplus · Accepted Answer

Rapid growth of production and employment often leads to increased domestic consumption, which can result in higher imports. This can cause the trade balance to deteriorate, leading to larger trade and current account deficits as the country imports more than it exports.

Concerning a Country's Business Cycle, Rapid Growth of Production and Employment