Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
True
B
False
Understanding the Answer
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Answer
An increase in imports can lead to a current account deficit, but it doesn't always have to. The current account balance is a measure of a country's trade with the rest of the world, including exports and imports. If a country imports more goods and services than it exports, it may run a deficit. However, if exports also increase significantly, they can offset the impact of higher imports. For example, if a country imports a lot of electronics but also sells a lot of agricultural products abroad, the strong export performance might balance out the imports, preventing a deficit.
Detailed Explanation
This statement is false. Other options are incorrect because Many think that more imports mean a deficit.
Key Concepts
Current Account Balance
Net Exports
Economic Health
Topic
Current Account Balance Dynamics
Difficulty
medium level question
Cognitive Level
understand
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