Which of the following correctly describes the relationship between savings, the government budget balance, and the current account?
A) Private savings plus the government budget balance must equal private investment plus the current account.
B) Private savings plus the current account must equal private investment plus the government budget surplus or deficit.
C) Private savings plus private investment must equal the current account plus the government budget balance.
D) Private investment must equal private savings plus the current account minus the government budget balance.
A
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On the foreign exchange market, an increase in a country's exchange rate
A) decreases the demand for its currency and shifts the demand curve rightward. B) increases the quantity demanded of its currency and leads to a movement up along the demand curve. C) decreases the quantity demanded of its currency and leads to a movement up along the demand curve. D) decreases the demand for its currency and shifts the demand curve leftward. E) increases the quantity demanded of its currency and leads to a movement down along the demand curve.
Suppose the currency drain ratio is 25 percent and the desired reserve ratio is 20 percent. The money multiplier equals
A) 4.00. B) 5.42. C) 2.00. D) 2.78. E) 3.00.