Whenever there is a deficit in the current account GNDI is:

Question

Quizplus · Accepted Answer

GNDI (Gross National Disposable Income) is equal to GNE (Gross National Expenditure) plus net international transfers. Whenever there is a deficit in the current account (meaning that exports are less than imports), GNE decreases and net transfers become negative, resulting in GNDI being less than GNE. Therefore, choice C is the best answer. Choice A cannot be correct because GNDI includes net international transfers, which are not included in GNE. Choice B cannot be correct because a deficit in the current account means that the country is spending more on imports than it is earning from exports, which results in a decrease in GNE. Choice D is not correct because there is no necessary relationship between domestic investment spending and the equality between GNDI and GNE.

Whenever There Is a Deficit in the Current Account GNDI