The current account deficit and the budget deficit move together; therefore,the budget deficit can be used to fully explain the account deficit.

Question

Quizplus · Accepted Answer

While the current account deficit and the budget deficit are related, they are not fully interchangeable or fully explanatory of each other. The current account deficit includes not only the trade deficit but also net income flows and transfer payments, which may not be directly impacted by the government's budget. Additionally, other factors such as exchange rates, foreign investment, and savings rates also play a role in determining the current account deficit.

The Current Account Deficit and the Budget Deficit Move Together;