Asked by Sylvia Joseph on Jun 19, 2024
Verified
If the personal savings rate rose to 10%
A) our current account deficit would probably fall.
B) our current account deficit would probably rise.
C) our current account deficit would be unaffected.
Personal Savings Rate
The percentage of personal disposable income that is saved by households rather than spent on consumption.
Current Account Deficit
A current account deficit occurs when a country's total imports of goods, services, and transfers are greater than its total exports, indicating it is spending more on foreign trade than it is earning.
- Analyze the relationship between personal savings rates and the current account balance.
Verified Answer
DF
Daisy FloresJun 21, 2024
Final Answer :
A
Explanation :
A higher personal savings rate means that individuals are spending less and therefore importing fewer goods and services, which would help to reduce the current account deficit.
Learning Objectives
- Analyze the relationship between personal savings rates and the current account balance.