A Current Account Deficit

question 25

Multiple Choice

A current account deficit

• A) is never possible because the balance of payments must always balance.
• B) can seldom be larger than 50 percent of a capital account surplus.
• C) can help finance a government deficit indefinitely.
• D) can help finance a government deficit if foreign lenders accumulate government bonds.
• E) does not include investment earnings that are part of the capital account.

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