ShortAnswer HELP! (1 Viewer)

[NiMm]

- Explain why current account balances of countries are compared using CAD as a percentage of GDP

- Describe TWO possible reasons for an increase in the Current Account balances over a period of two years

- Explain how an increase in the CAD can impact on future Current Account outcomes



*gulps....confusenesss*...

 

[Loz_metalhead]

- Explain why current account balances of countries are compared using CAD as a percentage of GDP
GDP is the total output of an economy-therefore shows how sustainable it is-larger the percentage less sustainable.

- Describe TWO possible reasons for an increase in the Current Account balances over a period of two years

Economic growth-increase in borrowing and M.
Worsening in the TOT-BOGS component

- Explain how an increase in the CAD can impact on future Current Account outcomes

CAD is a restraint on eco growth-harder to pay off due to decrease in national Y-more borrowing-increase servicing costs-increase CAD
Exchange rate volatility-less investment because of decrease in confidence-depreciation-imported inflation-increase BOGS.