Let G stand for government spending, T for taxes, I for private investment, and S for private saving. Complete the following equation for the current account deficit: Current Account Deficit = ( - )+ ( - )
Which of the following statements about the current account deficit are correct?
i. A nation's current account deficit can be caused by a net financial inflow.
ii. Decreasing a current account deficit is entirely in the hands of the home nation Using a current account deficit to finance domestic consumption may result in a burden for a nation's economy.
iii. A current account deficit always causes huge problems for a nation's economy.
iv. A successful reduction of a nation's current account deficit must be supported by complementary policies in foreign nations with large current account surpluses.