Which of the following is true?

Question

Quizplus · Accepted Answer

A country with highly attractive domestic investment opportunities will tend to attract foreign investment, which would increase the capital inflow and lead to a current account deficit. A low saving rate would result in the country borrowing more from foreign sources to finance investment, also leading to a current account deficit. Choices A and B are incorrect as the current account deficit is not necessarily a financial obligation of the federal government and a country can run a deficit over a prolonged period if it is able to attract foreign investment. Choice C is also incorrect as a high saving rate would result in a surplus, not a deficit.

Which of the Following Is True