A Current Account Deficit

question 95

Multiple Choice

A current account deficit

• A) will not pose a problem, especially if it is accompanied by an expansionary fiscal policy.
• B) may pose no problem if the borrowed funds are channeled into productive domestic investment projects that pay for themselves with the revenue they generate in the future.
• C) may still pose a problem, even if the borrowed funds are channeled into productive domestic investment projects.
• D) There is no relation between current account surplus and between savings and investment.
• E) will pose a problem because the country is borrowing funds from the rest of the world that it won't be able to pay back later.

---

Definitions:

Section 402A

Part of the Restatement (Second) of Torts, imposing strict liability on manufacturers for defective products that cause harm.

Liability Exists

A condition where legal responsibility for damages or obligations is present and enforceable by law.

Without Substantial Change

This entails maintaining the primary essence or core of something while possibly making minimal adjustments that do not significantly alter its nature or function.

Negligence

A failure to behave with the level of care that someone of ordinary prudence would have exercised under the same circumstances, resulting in harm or damage.