Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Holding other factors constant, a country is more likely to have a deficit in its current account when there are more attractive investment opportunities,
Holding other factors constant, a country is more likely to have a deficit in its current account when there are more attractive investment opportunities, because those interested in the investment opportunities need to U.S. dollars, thereby the demand for dollars and the exchange rate (foreign currency/dollar). It will take foreign currency to buy one dollar, so purchasing U.S. goods is expensive. This will exports and imports, thus creating a negative balance of trade and a deficit in its current account.
Step by Step Solution
★★★★★
3.36 Rating (162 Votes )
There are 3 Steps involved in it
Step: 1
Answer buy increasing more more decrease increase Holding o...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started