Economic Theory Shows That the Current Account Deficit Is Always

question 18

Multiple Choice

Economic theory shows that the current account deficit is always equal to the capital account surplus.This means that

• A)the federal budget must always be in balance.
• B)when a country exports more goods and services than it imports, it also imports assets equal to the difference.
• C)current account deficits should be avoided.
• D)trade deficits tend to be eliminated automatically.

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Definitions:

Poisson Distribution

A discrete probability distribution that expresses the probability of a given number of events occurring in a fixed interval of time or space, given a known constant rate of occurrence.

Standard Normal

A special case of the normal distribution used in statistical analysis where the mean is 0 and variance is 1.

Area

The extent or measurement of a surface, typically measured in square units.

Normal Distribution

A bell-shaped distribution that is symmetrical about the mean, describing how the values of a variable are spread or distributed.