Persistent Current Account Deficits Make Sense If

question 35

Multiple Choice

Persistent current account deficits make sense if

• A) the capital account surplus is reduced.
• B) government interest rates go down accordingly.
• C) the associated foreign borrowing is used to finance increased productive capacity.
• D) personal income taxes are reduced.
• E) the government budgetary debt is not growing.

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Definitions:

Cockatoos

A group of large, noisy parrots native to the Australasian region, known for their distinctive crests and varied colors.

Smuggled

Goods or commodities that are imported or exported illegally, without paying tariffs or adhering to trade regulations.

Transit

The movement of people or goods from one location to another, typically refers to public transportation systems.

Equilibrium Price

The market price at which the quantity of an item supplied is equal to the quantity demanded.