Reducing a Current Account Surplus Requires a Country to

question 124

Multiple Choice

Reducing a current account surplus 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:

Temporal Method

An accounting technique used for converting the financial statements of a subsidiary into the parent company's reporting currency, by using exchange rates based on the timing of the underlying transactions.

Year-End Spot Rate

The exchange rate of one currency to another at the close of the last trading day of the financial year.

Historical Rate

The exchange rate used to convert foreign currency amounts involved in a transaction to the reporting currency based on the rate in effect at the time of the transaction.

Current-Rate Method

An accounting method used in translating the financial statements of a foreign subsidiary, where all current and non-current items are translated at the current exchange rate.