Question
Please mark the only INCORRECT statement about the external current account of the balance of payments: a. Another reason why emerging market economies may have
Please mark the only INCORRECT statement about the external current account of the balance of payments:
a. Another reason why emerging market economies may have large current account deficits is because private sector consumption and investment are high and private savings is low
b. According to the absorption approach, a governmet could reduce a large current account deficit by raising interest rates to reduce consumption and by cutting its fiscal deficit
c. According to the absorption approach, a governmet could reduce a large current account deficit by cutting interest rates to increase investment and increase government consumption
d. One of the main reasons why emerging market economies have large current account deficits is because governments have large fiscal deficits
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