There Is an Intimate Relationship Between a Country's BCA and How

question 51

Multiple Choice

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures. This relationship is given by BCA ≡ X - M ≡ (S - I) + (T - G) . Given this, in order for a country to reduce a BCA deficit, which of the following must occur?

• A)For a given level of S and I, the government budget deficit (T - G) must be reduced.
• B)For a given level of I and (T - G), S must be increased.
• C)For a given level of S and (T - G), I must fall.
• D)All of the above would work to reduce a BCA deficit.

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Definitions:

Influence

The capacity to have an effect on the character, development, or behavior of someone or something, or the effect itself.

Venture Capital

Financing provided to new business ventures by professional, outside investors—that is, venture capitalists, usually groups of wealthy investors and securities firms.

Securities

Generally, stocks, bonds, or other items that represent an ownership interest in a corporation or a promise of repayment of debt by a corporation.

Ownership Share

The portion of a company or property legally owned by an individual or entity, often represented as a percentage.