A nation wishing to reduce its current account deficit would be advised to ?
Correct answer: D. decrease domestic consumption
- A. engage in more government spending
- B. reduce government taxes
- C. increases private investment spending
- D. decrease domestic consumption
Explanation
Reducing domestic consumption generally lowers spending on imported goods and services, which improves the current-account balance. More government spending, lower taxes or higher private investment may instead increase demand for imports.
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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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