balance of trade deficit

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Suppose that one year a country had a balance of trade deficit. Suppose also that the balance for wages, investment income and current transfers was zero. Then which of the following statements is false?

a) Borrowing from abroad must have been equal to the trade deficit.

b) Either investment must have exceeded saving, or government spending exceeded taxes (net of transfers and subsidies), or both.

c) The country’s debt to foreign countries must have grown as a percentage of GDP.

d) There must have been a surplus on the capital and financing account. Business management question 6543

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Suppose that one year a country had a balance of trade deficit. Suppose also that the balance for wages, investment income and current transfers was zero. Then which of the following statements is false?

a) Borrowing from abroad must have been equal to the trade deficit.

b) Either investment must have exceeded saving, or government spending exceeded taxes (net of transfers and subsidies), or both.

c) The country’s debt to foreign countries must have grown as a percentage of GDP.

d) There must have been a surplus on the capital and financing account. Business management question 6543

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