Assuming there is a burden from a current account deficit, that burden would have the least impact on a country if the current account deficit is used to finance
A) unemployment compensation benefits.
B) Social Security benefits.
C) expenditures on food and recreation.
D) investment in plant and equipment.

Question

Quizplus · Accepted Answer

Using a current account deficit to finance investment in plant and equipment can potentially lead to greater productivity and economic growth in the long run, offsetting any potential burden from the deficit. In contrast, using the deficit to finance expenditures on food and recreation or social welfare benefits may not have the same positive impact on the economy.

Assuming There Is a Burden from a Current Account Deficit