The open economy equilibrium business-cycle model predicts that the real current account balance will be:

Question

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In an open economy equilibrium business-cycle model, the real current account balance tends to be low in expansions because domestic consumption and investment are high, leading to increased imports and reduced exports. Conversely, in recessions, the real current account balance is high as domestic consumption and investment decrease, leading to reduced imports and potentially increased exports.

The Open Economy Equilibrium Business-Cycle Model Predicts That the Real