The argument that U.S current account deficits cause net job losses for Americans ?
Correct answer: D. fails to recognize that a current account deficit is matched by an equal inflow of foreign funds which finances employment increasing investment spending
- A. is true by definition in all possible circumstances
- B. is supported by recent U.S history
- C. focuses only on the overall economy and is thus always true
- D. fails to recognize that a current account deficit is matched by an equal inflow of foreign funds which finances employment increasing investment spending
Explanation
A current-account deficit is matched by a capital or financial-account surplus, meaning foreign funds flow into the country. Those funds can finance domestic investment and employment, so the claim that the deficit automatically causes net job losses is incomplete.
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