Reducing a Current Account Deficit Requires a Country to

question 114

Multiple Choice

Reducing a current account deficit requires a country to

• A) increase the government's deficit and increase private investment relative to saving.
• B) increase the government's deficit and decrease private investment relative to saving.
• C) decrease the government's deficit and increase private investment relative to saving.
• D) decrease the government's deficit and decrease private investment relative to saving.

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Definitions:

Capital

Assets used in the production of goods and services, such as machinery, buildings, or tools.

Production Efficiency

A situation where the economy is utilizing all of its resources efficiently, producing what people want at the lowest possible cost.

Production Possibility Frontier

Describes the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently utilized.

Unemployment Rate

The percentage of the labor force that is jobless and actively looking for employment.