An increase in government budget deficits will necessarily be associated with an worsening of the current account balance.

Question

Quizplus · Accepted Answer

An increase in government budget deficits does not necessarily lead to a worsening of the current account balance. The relationship between budget deficits and the current account balance, known as the twin deficits hypothesis, is complex and influenced by factors such as the state of the economy, interest rates, exchange rates, and the behavior of private savings and investment.

An Increase in Government Budget Deficits Will Necessarily Be Associated