Reducing a current account surplus requires a country to:
A) Increase the government's deficit and increase private investment relative to saving
B) Increase the government's deficit and decrease private investment relative to saving
C) Decrease the government's deficit and increase private investment relative to saving
D) Decrease the government's deficit and decrease private investment relative to saving

Question

Quizplus · Accepted Answer

Reducing a current account surplus involves increasing domestic demand, which can be achieved by increasing the government's deficit (expansionary fiscal policy) and increasing private investment relative to saving, leading to higher imports and reduced surplus.

Reducing a Current Account Surplus Requires a Country To