Author Question: Average per-capita GDP in the richest, most prosperous economies is ________ times that of the ... (Read 58 times)

natalie2426 · **on:** Jun 30, 2018

Average per-capita GDP in the richest, most prosperous economies is ________ times that of the average in the ________ economies.

A) 95, low (poorest) income
B) 95, lower-middle income
C) 73, lower-middle income
D) 44, low (poorest) income
E) 69, low (poorest) income

Question 2

Explain how government deficits fell yet current account surpluses remained the same in the EU prior to adopting the euro. Also explain this in the context of the twin deficits theory.

What will be an ideal response?

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

Answer to Question 1

E

Answer to Question 2

Current accounts didn't change due to a sharp fall in the private saving rate, which declined by about 4 percent of output, almost as much as the increase in government saving. The behavior of private savers neutralized the government's efforts to raise national saving. The twin deficits theory, the idea of government deficit coupled with a sharply increased current account deficit, expects the EU's current account surplus sharply as a result of the fiscal change, which didn't work in this case.