Which of the following would increase the size of the deficit in the current account of Australia?

Question

Quizplus · Accepted Answer

A decrease in exports means that Australia is selling fewer goods and services to other countries, resulting in less income coming into the country and increasing the deficit in the current account.

Answer: D
 A decrease in the amount of income Australian companies pay to foreigners who own investments in Australia means that foreign investors are receiving less income from their investments in Australia. This means less money is leaving the country, resulting in a smaller deficit in the current account. Therefore, this option would not increase the size of the deficit.

Therefore, the best choice that would increase the size of the deficit in the current account of Australia is C (a decrease in exports).

Which of the Following Would Increase the Size of the Deficit