Since the 1980s, the U.S. current account deficit has been financed by
A) large outflows of domestic capital to other countries.
B) large inflows of capital from private foreign investment in the United States.
C) loans by U.S. residents to the government.
D) large inflows of foreign government capital.
E) the Tax Reform Act of 1986, which increased income taxes for the wealthy.

Question

Quizplus · Accepted Answer

The U.S. current account deficit has been financed by large inflows of capital from private foreign investment in the United States since the 1980s. This includes foreign investment in U.S. stocks, bonds, and other assets, as well as foreign direct investment in U.S. businesses.