Which one of the following statements is the MOST accurate?
A) An increase in disposable income improves the current account.
B) An increase in disposable income does not affect the current account.
C) An increase in disposable income worsens the current account.
D) An increase in income worsens the current account.
E) An increase in income improves the current account.

Question

Quizplus · Accepted Answer

An increase in disposable income typically leads to higher consumer spending, which can increase imports. This, in turn, can worsen the current account by increasing the trade deficit.

Which One of the Following Statements Is the MOST Accurate