Question

The situation of a net creditor nation running current account surpluses is worrisome if the: a....

The situation of a net creditor nation running current account surpluses is worrisome if the:

a. net credit position is very small.

b. current account surplus is small.

c. GDP growth rate is very high.

d. C + G per capita is high.

e. investment rate is low or falling

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Answer #1

Ans) E (investment rate is low or falling)

Situation of a net creditor nation running current account surpluses is worrisome if investment is low or falling because a net creditor country with surpluses trade is savings channeling to the rest of the world either through lending or through purchase of foreign assest productive The situation is viewed generally as prudent but may have some unpleasant consequences.

a country with a trade surplus is less spending on consumption, investment and government combined than their national income. The excess is being saved abroad.

Net creditor status means that the country total savings is more abroad than foreigners have in their country.

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