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9966 [12]
3 years ago
12

The notation is Y = GNP = national income C = consumption I = private investment G = government spending X = exports M = imports

T = taxes There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures. Given this, which of the following is a true statement? Multiple Choice All of the options If (S − I) < 0, it implies that a country's domestic savings is insufficient to finance domestic investment. If (T − G) < 0, it implies that a country's tax revenue is insufficient to finance government spending. When BCA is negative, it implies that government budget deficits and/or part of domestic investment are being finance with foreign-controlled capital.
Business
1 answer:
IRINA_888 [86]3 years ago
3 0

The true statement is <em>D. When </em><em>BCA</em><em> is negative, it implies that government </em><em>budget deficits</em><em> and/or part of </em><em>domestic investment </em><em>are being financed with </em><em>foreign-controlled capital</em><em>.</em>

The above statement is based on the intimate relationship between a country's Balance of the Current Account (BCA) and how the country finances its domestic investments and pays for government expenditure.

Explanation:

National income = Y = GNP

Consumption = C

Private Investment = I

Government spending = G

Exports = X

Imports = M

Taxes = T

Therefore, the BCA = X-M = (S-1) + (T – G)

Where BCA = Balance of Current Account

Thus, the Balance of the Current Account (BCA) should be <u>positive</u> to avoid deficit-financing of government budgets.

Learn more: brainly.com/question/8859561

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