Other Things Being Equal, an Increase in the Current Account

question 6

Multiple Choice

Other things being equal, an increase in the current account deficit could be due to

• A)a fall in the government's budget deficit.
• B)a fall in domestic investment.
• C)a rise in the budget surplus.
• D)an increase in private saving.
• E)a decrease in private saving.

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Definitions:

Point Elasticity

A measure of how responsive the quantity demanded or supplied of a good is to a change in its price, calculated at a particular point on the demand or supply curve.

Producer Surplus

The profit producers make over and above the minimum amount they would be willing to accept for selling their goods or services.

Equilibrium Quantity

The quantity of goods or services supplied is exactly equal to the quantity demanded at the market price.

Equilibrium Price

The cost where the supply of goods meets the demand for those goods.