What Is the Effect on Trade Deficits of a Country's

question 42

Multiple Choice

What is the effect on trade deficits of a country's saving rate?

• A)A low savings rate means that consumers are buying more, and more buying leads to an increase in a country's trade deficit.
• B)A low savings rate means that people are spending more than they earn and that results in increased financial difficulties for consumers, higher interest rate, and fewer international sales, resulting in a decrease in a country's trade deficit.
• C)A high savings rate means that there is more money available for investment which results in greater production and increased international sales which lead to lower trade deficits.
• D)A country's savings rate has no effect on the country's trade deficit.

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