If large deficit's were to persist for many years, what would you expect to happen on the level of foreign direct investments within our country?
If there are large deficits for many years, that would mean the country's debt to GDP ratio would spike resulting in low credit rating and higher default risk which will deter the foreign investors to invest in the country, so there will be decline in the foreign direct investments in the country. Moreover, persist large deficit also result in higher taxes and higher interest rate which will decline economic growth which also deter foreign direct investments within country.
the above is answer..
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