b) Deficits and surpluses

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Last updated 7:39 PM on 10/14/26
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5 Terms

1
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  • current account + capital/financial account = ?


  • 0


2
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  • current account + capital/financial account = 0

  • this means that…


  • the sale/purchase of goods/services

  • and the sale/purchase assets

  • must finance each other


3
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  • causes of deficits and surpluses on the current account


  • productivity

  • product quality

  • economic growth

  • exchange rate changes


4
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  • productivity impacts deficits/surpluses by…


  • changing the cost per unit of output

  • changing the price


5
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  • economic growth impacts deficits/surpluses by…


  • increasing real income

  • increasing firm revenue