Explain why a country can have a large trade deficit combined with a current account surplus. In explaining this, provide at least three transactions in the current account besides imports and exports. Explain how current transactions listed in this year’s capital account have implications for transactions in the current account in future years. Provide at least three examples. Suppose that a country has a current account deficit. Explain the three ways in which that deficit can be offset.

Q: Question: In an economy with a high dependency on tourism, which faces a prolonged period of border…

A: Economic growth: Rise in an economy's ability to produce goods and services over time, often…

Q: 18. The hypothetical country runs a current account A) surplus; $100 B) deficit; $120 C) surplus;…

A: Calculate the current account balance as follows:Explanation:The country exports $1000 worth of…

Q: Comment on the following statement: "Since the United States imports more than it expona. It is…

A: The balance of payment (BOP) is the financial statement of a country which includes all its…

Q: What is meant by current account deficit and current account surplus? State their significance

A: A balance of payment account is a record of international transactions of an economy over a…

Q: Will exchange rates correct a balance-of-trade deficit? Consider the case of a balance-of-trade…

A: The balance of trade deficit occurs when the value of imports of a country exceeds the value of its…

Q: Assume that the following details apply to the U.S. economy: Government budget deficit: $150…

A: G - T = Government budget deficit = $150 billion. S = Domestic Savings = $2,000 billion I = Domestic…

Q: Consider a world with only two countries (i.e., two large open economies), the home country and the…

A: Home CountryCd = 400 + 0.5(Y-T) - 100rwId = 300 - 100rwY = 2000T = 250G = 300Foreign CountryCd = 200…

Q: Which of the following describes the statement "A fall in the supply of petrol will lead to an…

A: Economics is the branch of social science that deals with the production, consumption, and…

Q: The US is the world’s largest net debtor nation. What will happen to the US net International…

A: The difference between a country's stock of foreign assets and a foreigner's stock of those assets…

Q: Suppose a Portuguese citizen travels to Tanzania to go on a safari and uses euros for the…

A: Balance of Payment: The balance of payments is a systematic record of all economic transactions…

Q: The US typically imports (M) more goods and services than it exports (X). a. Explain what this…

A: a. The main component of a country's current account balance is usually invariably its trade deficit…

Q: Explain the three different viewpoints (meanings) of the current account balance. Discuss the…

A: The current account measures the value of exports and imports of goods and services, income flows,…

Q: Consider the following economy:-   Mariginal propensity to save = 0.2 Mariginal propensity to…

A: Economic policy formulation will remain critical since it determines how the economy will develop…

Q: Assume an economy has a large current account deficit. Indicate the causes and consequences of it in…

A: A current account deficit takes place while a country's total imports of goods, services, and…

Q: Consider a world with only two countries (i.e., two large open economies), the home country and the…

A: An increase in home future labor income could have several effects on the world equilibrium interest…

Q: What is current account deficit? List down, with detailed explanations, what causes current account…

A: Current Account forms a part of a country's Balance of Payments (BOP). It includes trade in goods…

Q: The following table shows some national accounting data for a given year for a hypothetical country.…

A: Exports are products and services that are manufactured internally and acquired by outsiders. This…

Q: QUESTION 12 Table 1 shows the summary of China's balance of payments and net international…

A: Reserves are the funds that are kept safe by a nation and to be used at the time of financial…

Q: Consider a world with only two countries (i.e., two large open economies), the home country and the…

A: The economy is an area where we earn our living, and where we perform the basic functions of…

Q: The difference between between exports and imports of goods/services forms the current account of…

A: Balance of payments is the statement of transactions of a country trade with rest of the world.…