A current account deficit means that a country may ?
Correct answer: A. reduce its stock of foreign assets
- A. reduce its stock of foreign assets
- B. increase its stock of foreign assets
- C. increases its savings
- D. increases its foreign currency reserves
Explanation
A current-account deficit means the country is spending more abroad than it earns from current transactions and must finance the gap. It may do so by selling or reducing its stock of foreign assets, or by borrowing from abroad.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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