The U.S. current-account deficit increased to $488.5 billion in 2018 from $449.1 billion in 2017. The...

The U.S. current-account deficit increased to $488.5 billion in 2018 from $449.1 billion in 2017. The deficit was 2.6 percent of current-dollar GDP in the fourth quarter of 2018 (Bureau of Economic Analysis, March 27, 2019). What does the U.S. current account deficit mean?

a. The sum of U.S. domestic investment and the government budget deficit exceeded U.S. private sector’s saving in 2018.
b. U.S. investors invested more abroad than foreigners invested in the United States in 2018.
c. The total saving in the United States was more than its total investment in 2018.
d. U.S. national income was more than its total domestic expenditure (the sum of consumption, government expenditure, and domestic investment) in 2018.

Solutions

Expert Solution

Answer : b) U. S. investors invested more abroad than foreigners invested in the United States in 2018.

Reason : Current account deficit means when country imports more goods, services, and capital than it's exports. It is situation where country relies on foreigners for capital to invest and spend.

jeff jeffy answered 1 year ago

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