Author Question: Refer to Figure 11.5. An increase in the level of investment is best illustrated by diagram A) A. ... (Read 87 times)

cmoore54 · **on:** Jun 30, 2018

Refer to Figure 11.5. An increase in the level of investment is best illustrated by diagram

A) A. B) B. C) C. D) D.

Question 2

What happens when a country runs a current account deficit?

What will be an ideal response?

sultansheikh · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

C

Answer to Question 2

When a country runs a current account deficit, it is analogous to what takes place when a single household spends more than it earns. To fund this extra spending, the household, and similarly the country, either borrows or spends down assets that had previously been accumulated.