The Current Account Balance Does NOT Equal

question 10

Multiple Choice

The current account balance does NOT equal:

• A)the difference between domestic product and domestic expenditure.
• B)the difference between national saving and domestic investment.
• C)net foreign investment.
• D)the difference between government saving and government investment.

---

Definitions:

Real Interest Rate

The rate of interest an investor expects to receive after allowing for inflation, representing the true cost of borrowing.

National Saving

The sum of savings made by both individuals and the government within a country, crucial for financing national investments.

Real Exchange Rate

An exchange rate that has been adjusted to reflect the purchasing power of different currencies.

Demand For Dollars

Refers to the desire or need by individuals, businesses, or countries to hold assets in U.S. dollars, influenced by factors like stability and strength of the U.S. economy.