When future labour income falls in a small open economy,it causes the current account to ________ and investment to ________.
A)fall;rise
B)rise;remain unchanged
C)fall;remain unchanged
D)rise;rise

Question

Quizplus · Accepted Answer

When future labor income falls, consumers may save more to smooth consumption, leading to a rise in the current account. Investment remains unchanged as it is not directly affected by changes in future labor income.

When Future Labour Income Falls in a Small Open Economy,it