(I)  the U

question 28

Multiple Choice

(I)   The U.S. trade deficit is a financial obligation of the federal government, and if it is not paid off, foreigners will be reluctant to loan money to the U.S. government.
(II)   When a nation runs a current account deficit due to a merchandise trade deficit, it must also be true that the nation has a surplus on its capital account due to an inflow of foreign capital.

• A) I is true; II is false.
• B) I is false; II is true.
• C) Both I and II are true.
• D) Both I and II are false.

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