Question

19. The United States has experienced persistent current account deficits, reflecting the fact that ___________.

A) this country’s national saving is more than its domestic investment B) this country’s domestic absorption exceeds its GNP

C) this country’s economic growth has been slow

D) this country’s unemployment rate has been too high.

23. If a country runs a financial account surplus, it means that __________________________. A) this country’s asset imports exceed its asset exports

B) this country’s international debt accumulates

C) this country is a net international lender

D) all of the above

24. A country’s international debt must increase if ___________________________. A) its current account is in deficit

B) its financial account is in deficit

C) its international merchandise trade is in deficit

D) all of the above

25. For the US to decrease its current account deficits, which of the following should be workable? A) policies designed to cut government budget deficits and promote national savings

B) policies designed to cut domestic investment

C) policies designed to tax imported goods

D) policies designed to protect domestic infant industries

Answer 1

19)It's because of the trade deficit. Americans spend more on imports than U.S. businesses export. The United States is able to borrow enough to pay for its trade deficit because of the demand for U.S. Treasury notes.

So the ans to this very first part is

A) this country’s national saving is more than its domestic investment.

23) A financial account surplus is a positive current account balance, indicating that a nation is a net lender to the rest of the world.

So the answer to this part is

This country is net international lender.

24)    A country’s international debt must increase if

All of the above is correct answer.

25) Devaluation of exchange rate (make exports cheaper – imports more expensive)

Reduce domestic consumption and spending on imports (e.g. tight fiscal policy/higher taxes)

Supply side policies to improve the competitiveness of domestic industry and exports.

So the correct answer is

C) policies designed to tax imported goods.