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Current Account and Trade Balance
easy

An increase in U.S. real income will always lead to a decrease in the current account balance due to higher imports from other countries, including the European Union.

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Learning Path
Learning Path

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Choose the Best Answer

A

True

B

False

Understanding the Answer

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Answer

An increase in U. S. real income means that people and businesses have more money to spend. When they have more money, they often buy more goods and services, including those made in other countries. This higher demand for foreign products can lead to an increase in imports, which means that the U.

Detailed Explanation

An increase in real income does not always mean the current account balance will decrease. Other options are incorrect because This answer suggests that higher income always leads to more imports.

Key Concepts

Current Account Balance
Trade Balance
Real Income
Topic

Current Account and Trade Balance

Difficulty

easy level question

Cognitive Level

understand

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