📚 Learning Guide
Current Account Balance Dynamics
easy

In the context of Argentina's economy, an increase in imports will likely lead to a decrease in __________, affecting the current account balance.

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
Explore Topic

Choose the Best Answer

A

net exports

B

foreign investment

C

government spending

D

inflation rates

Understanding the Answer

Let's break down why this is correct

Answer

In Argentina's economy, an increase in imports will likely lead to a decrease in exports, affecting the current account balance. When a country imports more goods and services, it spends more money on foreign products, which can create a trade imbalance. This means that if Argentina is buying more from other countries than it is selling to them, it can lead to a deficit in the current account. For example, if Argentina imports more cars from other countries while not increasing its own car exports, the money flowing out for imports exceeds the money coming in from exports. This imbalance can make it harder for Argentina to maintain a stable economy.

Detailed Explanation

When a country buys more from other countries, it has fewer goods to sell abroad. Other options are incorrect because Some might think that more imports mean more foreign money coming in; It's easy to confuse imports with government spending.

Key Concepts

Current Account Balance
Net Exports and Imports
Economic Health
Topic

Current Account Balance Dynamics

Difficulty

easy level question

Cognitive Level

understand

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