1. Twin deficits occurred

1. Twin deficits occurred in the 1980s

1. Twin deficits occurred in the 1980s 1. Twin deficits occurred in the 1980s reveal that huge government budget deficit may result in trade deficit. However, by the late 1990s, the federal budget deficit had moved into surplus, but the current account deficit widened. Can you explain the causes of the widening current account deficit? 2. Are continuous current account deficits sustainable in the U.S.? Please express your thoughts based on the economic knowledge you have learned.How does the relationship between saving and investment affect the current account balance? What is the connection between the governments budget deficit and the current account deficit? The BoP allows us to investigate the accounting relationships between international flows of goods, services, and financial assets. If a country has Balance of Payments equilibrium, which of the following statements are correct? a) If there is deficit in current account (CA); there must be deficit in capital account (KA). b) If there is deficit in current account (CA); there must be surplus in capital account (KA). c) If there is deficit in current account (CA); the capital account (KA) must equal to zero. d) If the total import is greater than export; then the capital inflow must be greater than the capital outflow. Select all of the above that apply is the budget deficit of a country linked to its current account balance? how so? Explain how it is possible for the united states current account deficit to grow while the budget deficit has disappeared.

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