(D). A current account deficit (CA < 0) implies two things: absorption is more than national income (A > Y) and national saving is less than investment spending (S < I). Label the following statements as true, false or uncertain, and provide explanation for your answer.
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(D). A current account deficit (CA < 0) implies two things: absorption is more than
Label the following statements as true, false or uncertain, and provide explanation for your answer.
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- If a country has a trade deficit of $30 billion, which of the following can be true? Group of answer choices The country's exports are $150 billion and its imports are $120 billion. The country's exports are $110 billion and its imports are $140 billion. The country's exports are $140 billion and its imports are $40 billion. The country's exports are $120 billion and its imports are $140 billion.Future U.S. deficits could be decreased by Question 36 options: decreasing current and future taxes increasing government expenditures and decreasing taxes decreasing government expenditures and increasing taxes increasing transfer payments and decreasing interest payments on the debtGiven that a country has a large and possibly unsustainable current account deficit, explain how you can reduce it using each of the following approaches: Elasticity approach The absorption approach The monetary approach Suggest solutions to the limitations of each of the three approaches in a) above.
- “There has been a turnaround from the sizeable net outflows over the past two years when South African companies stepped up their efforts to internationalise their businesses. The shift in direct investment trends made a small contribution to improving the financial account of South Africa’s balance of payments, which showed a surplus of 3.5% for the third quarter, up from 1.3% the previous quarter. The Reserve Bank’s quarterly bulletin shows that capital inflows were more than adequate to finance the deficit on the current account deficit of the balance of payments, which widened to 4.1% from a revised 2.9% in the third quarter. Economists expect that the current account deficit, which tends to be a driver of the rand exchange rate, will narrow again in the fourth quarter as exports pick up again” (Joffe, 2016). In your opinion, can the government keep export demand stimulated such that the balance of payments remains dazzlingA country finds itself in the following situation: a government budget deficit of $1200; total domestic savings of $400, and total domestic physical capital investment of $1300. According to the national saving and investment identity, if investment decreases by $300 while the government budget deficit and savings remain the same, what will be the new value of the trade deficit after investment decrease?A country finds itself in the following situation: a government budget deficit of $700; total domestic savings of $1470, and total domestic physical capital investment of $2100. According to the national saving and investment identity, what is the current account deficit?
- Which of the following economic reasoning behind the twin deficit theory is not correct?a. According to the national income accounting, if private saving and investment stay constant, a government budget deficit can cause a trade deficit by reducing national saving. b. Government budget deficits (due to expansionary fiscal policy) and trade deficits during the 1980s and early 2000s in the US are the cases of the twin deficits.c. The chain of causality can work in a reverse way: a smaller fiscal deficit leads to a smaller trade deficit, other things being equal.d. All of the above are correct.The macroeconomic view of a trade deficit implies that, other things equal, the imposition of a tariff will reduce South Africa's trade deficit A. Because exports will be promoted and imports cannot possibly change B.Because imports will be reduced and exports cannot possibly change C.Only if the tariff has no impact on South Africa's spending or income D.Only if the tariff leads to increased income in South Africa relative to its spendingAustralia has a current account surplus of $3 billion per quarter and a net income deficit of $3 billion per quarter. Which of the following is TRUE? a. The trade surplus is $6 billion per quarter b. The capital account deficit is $6 billion per quarter c. Net foreign liabilities are increasing d. All the other options
- Future U.S. deficits could be decreased by options: increasing transfer payments and decreasing interest payments on the debt increasing government expenditures and decreasing taxes decreasing current and future taxes decreasing government expenditures and increasing taxesSelect all of the following statements which can be said of a country with a current account deficit over the previous year: The country is exporting more than it is importing, assuming that net foreign aid and investment income is zero. The country was a net borrower over the previous year. Assuming zero net foreign aid and investment income, the country imported more than it exported. The country will experience upward pressure on its currency prices. The country must decrease its currency reserve account.Are current account deficits necessarily undesirable? Provide a brief justification.