What does the existence of a current account deficit imply about a country’s net capital inflow – Do you consider a current account deficit an economic problem?
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QUESTION 1
⦁ Using the variables above illustrate how the expenditure and income components of GNP can be rearranged so as to identify the macroeconomic relationship between the current account; investment; and public and private savings. Explain how a country’s saving (private and public) can be applied to fund domestic and/or foreign investment. (10 points)
⦁ What does the existence of a current account deficit imply about a country’s net capital inflow? Do you consider a current account deficit an economic problem? (Explain) (5 points)
⦁ Suggest a period in Canadian history when a current account deficit may have contributed to economic growth (EXPLAIN) (5 points)
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