5. Current account deficitLet G stand for government spending, T for taxes, I for private investment, and S for private saving.Complete the following equation for the current account deficit:Current Account Deficit =)+ ( ▼ -Which of the following statements about the current account deficit are correct? Check all that apply.☐ Economic expansions may result in large current account deficits.A nation should avoid a current account deficit and associated debt at all costs.☐ Using a current account deficit to finance domestic consumption will never be a burden for a nation's economy.Using a current account deficit to increase domestic investment may be beneficial for a nation's economy.☐ A current account deficit can push current spending beyond current production.Which of the following could explain the U.S. international transactions paradox?OU.S. investors earn higher returns on their foreign investments than foreigners earn on their U.S. investments.OU.S. investors earn lower returns on their foreign investments than foreigners earn on their U.S. investments.◇ Foreign purchases of U.S. securities increase long-term interest rates, hurting the U.S. economy.

Balance of Payment implies BOP is the comprehensive record of all international transactions in the…

5. Current account deficit Let G stand for government spending, T for taxes, I for private investment, and S for private saving. Complete the following equation for the current account deficit: Current Account Deficit = - )+ ( ▼ - )

5. Current account deficit Let G stand for government spending, T for taxes, I for private investment, and S for private saving. Complete the following equation for the current account deficit: Current Account Deficit = - )+ ( ▼ - )

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter23: The International Trade And Capital Flows

Section: Chapter Questions

Problem 44P: Imagine that the U.S. economy finds itself in the following situation: a government budget deficit...

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Question

5. Current account deficit
Let G stand for government spending, T for taxes, I for private investment, and S for private saving.
Complete the following equation for the current account deficit:
Current Account Deficit =
)+ ( ▼ -
Which of the following statements about the current account deficit are correct? Check all that apply.
☐ Economic expansions may result in large current account deficits.
A nation should avoid a current account deficit and associated debt at all costs.
☐ Using a current account deficit to finance domestic consumption will never be a burden for a nation's economy.
Using a current account deficit to increase domestic investment may be beneficial for a nation's economy.
☐ A current account deficit can push current spending beyond current production.
Which of the following could explain the U.S. international transactions paradox?
OU.S. investors earn higher returns on their foreign investments than foreigners earn on their U.S. investments.
OU.S. investors earn lower returns on their foreign investments than foreigners earn on their U.S. investments.
◇ Foreign purchases of U.S. securities increase long-term interest rates, hurting the U.S. economy.

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