In the twin deficits hypothesis,to reduce a current account deficit,a country has to:
A) increase domestic investment
B) reduce private saving
C) reduce government budget deficit
D) All of the above are correct

Question

Quizplus · Accepted Answer

The twin deficits hypothesis suggests that there is a positive correlation between a country's current account deficit and government budget deficit. Therefore, reducing the government budget deficit would help in reducing the current account deficit. Increasing domestic investment and reducing private saving may have a positive impact on the economy, but they do not directly address the current account deficit issue.

In the Twin Deficits Hypothesis,to Reduce a Current Account Deficit,a