What two measures of macroeconomic activity are often referred to as the "twin deficits"?
A)net capital flows and net exports
B)the foreign exchange deficit and net foreign investment
C)the budget deficit and the trade balance
D)the saving-investment deficit and the export deficit

Question

Quizplus · Accepted Answer

The twin deficits refer to the budget deficit (the difference between government spending and revenue) and the trade balance (the difference between exports and imports). These two deficits are often seen as linked, as the budget deficit can lead to higher borrowing from foreign lenders, which in turn can lead to a larger trade deficit as funds flow back out of the country to pay for imports.

What Two Measures of Macroeconomic Activity Are Often Referred to as the "Twin