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Author Question: Why does continued foreign investment in U.S. stocks and bonds and foreign companies continuing to ... (Read 117 times)

Deast7027

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on: Jun 29, 2018
Why does continued foreign investment in U.S. stocks and bonds and foreign companies continuing to build factories in the United States result in a current account deficit in the United States?
 
  What will be an ideal response?

Question 2

Accumulating debt poses a problem for the U.S. federal government because
 
  A) it is currently in danger of defaulting on the debt.
  B) the debt has to ultimately be paid off.
  C) building roads and bridges do not yield enough benefits to justify their cost.
  D) a large debt-to-GDP ratio causes crowding out.


cswans24

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The willingness of foreign investors and companies to purchase financial and physical assets in the United States leads to a U.S. financial account surplus. If the United States runs a financial account surplus, it must run a current account deficit.

Answer to Question 2

D


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