Which of the following is the true description of the impacts of a temporary positive oil price shock on an oil-importing country like the U.S.?
A)National saving and current account surplus increase.
B)National saving decreases but current account surplus increases.
C)National saving increases but current account surplus decreases.
D)National saving and current account surplus decrease.

Question

Quizplus · Accepted Answer

A temporary positive oil price shock increases the cost of imports, leading to a decrease in national saving as more is spent on oil. The current account surplus decreases as the trade balance worsens due to higher import costs.

Which of the Following Is the True Description of the Impacts