Other things the same,if a country has a trade deficit and saving rises,
A)net capital outflow rises,so the trade deficit increases.
B)net capital outflow rises,so the trade deficit decreases.
C)net capital outflow falls,so the trade deficit increases.
D)net capital outflow falls,so the trade deficit decreases.

Question

Quizplus · Accepted Answer

A trade deficit occurs when a country imports more goods and services than it exports. Saving refers to the portion of income that is not consumed. If saving rises, it means that people are consuming less and saving more. This will lead to a decrease in the demand for imports, which will in turn reduce the trade deficit. Therefore, the correct answer is B) net capital outflow rises, so the trade deficit decreases.

Other Things the Same,if a Country Has a Trade Deficit