C
Chelsey S
Guest
So I'm working on my econ homework and I'm kind of confused about this current account vs. financial account stuff. The exact question is this:
Suppose that there is increased confidence from European investors toward holding U.S. assets. What must happen to the balance of payments on current account in the United States?
A. The current account must decrease by less than the amount of change in the financial account.
B. The current account must increase by the same amount as the change in the financial account.
C. The current account must remain the same.
D. The current account must decrease by the same amount as the change in the financial account.
E. The current account must increase by more than the amount of change in the financial account.
Please don't just answer the question, I actually want to understand why and everything. Thank you!!
Suppose that there is increased confidence from European investors toward holding U.S. assets. What must happen to the balance of payments on current account in the United States?
A. The current account must decrease by less than the amount of change in the financial account.
B. The current account must increase by the same amount as the change in the financial account.
C. The current account must remain the same.
D. The current account must decrease by the same amount as the change in the financial account.
E. The current account must increase by more than the amount of change in the financial account.
Please don't just answer the question, I actually want to understand why and everything. Thank you!!