Question
In: Economics
Which of the following will balance a country when it has a current account deficit? a....
Which of the following will balance a country when it has a current account deficit?
| a. | Gross financial outflows | b. | Gross financial inflows |
|---|---|---|---|
| c. | Net financial inflows | d. | Net financial outflows |
Solutions
Expert Solution
Net Financial inflows will balance a country's current account deficit as it increases the net investment in the home country
Net financial inflows- in simple terms ; A country is receiving more than it is investing in rest of the world
Net financial ouflow is the opposit of Net financial inflows ( investing more, receiving less).
Gross inflows are net sales of domestic financial instruments to foreign residents
Gross outflows are net purchases of foreign financial instruments by domestic residents
Rahul Sunny answered 1 year agoRelated Solutions
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