If Domestic Saving Is Less Than Domestic Investment, Then a Country

question 7

Multiple Choice

If domestic saving is less than domestic investment, then a country will have a ________ and positive net capital ________.

• A)trade deficit; outflows
• B)trade deficit; inflows
• C)trade balance; inflows
• D)trade surplus; outflows

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Definitions:

Exchange

The act of trading goods, services, or financial instruments, which can occur in a physical or virtual marketplace.

Current Account

A segment of a nation's balance of payments that comprises the balance of trade, net primary income, and net secondary income.

Deficit

The amount by which expenses or costs exceed income or revenues, especially in the context of government budgets.

Surplus

A condition where the quantity supplied of a good exceeds the quantity demanded at the current price.