Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
An economy can run a trade deficit (have negative exports) permanently if:
a. The Current and Financial account generate a net outflow of money, and the external debt does not increase as percentage of GDP .
b. The level of GDP of the country is sufficiently low.
c. Migration of the national labour force to overseas is allowed.
d. The Current and Financial account bring enough net inflow of money, and the external debt does not increase as percentage of GDP.
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