In: Finance
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.
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.