posted by Ange on .
okay got one more and in this one I need help, cuz I simply don't understand it!!
S^P=I+CA-S^G=I+CA+(G-T) this equation tells us that to reduce a current account deficit , a country must increase its privat savings , reduce domestic investment, or cut its government budget deficit.
Nowadays , some people recommend restrictions on imports from china ( and other countries) to reduce the American current account deficit.
-How would higher U.S.current aacount deficit?
-Do you agree that import restrictions would neccessarily reduce a U.S current account deficit...
Okay I am not asking for the answer but an explanation in an easy language:)