The Uses-Of-Saving Identity Shows That If the Government Budget Deficit

question 45

Multiple Choice

The uses-of-saving identity shows that if the government budget deficit rises,then which of the following must happen?

• A)Private saving must rise,investment must fall,and/or the current account must fall.
• B)Private saving must rise,investment must fall,and/or the current account must rise.
• C)Private saving must rise,investment must rise,and/or the current account must fall.
• D)Private saving must rise,investment must rise,and/or the current account must rise.

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Definitions:

Parent's Cash Flows

The cash inflows and outflows directly associated with the primary operating entity in a group of companies or conglomerate.

AASB 121

Refers to the Australian Accounting Standards Board provision dealing with the effects of changes in foreign exchange rates.

Exchange Differences

Variance arising from translating foreign currency transactions or foreign operations into the reporting currency.

Presentation Currency

The form of money used to express the financial records of a company.