If imports exceed exports,then:
A) private saving exceeds public saving.
B) private saving plus public saving exceed domestic investment.
C) private saving plus public saving minus domestic investment is negative.
D) domestic investment is negative.

Question

Quizplus · Accepted Answer

If imports exceed exports, then there is a trade deficit. This means that the country is spending more money on imports than it is earning through exports. As a result, the country's overall saving (private plus public saving) is lower than its domestic investment. The difference between saving and domestic investment is the current account balance, which would be negative in this case. Therefore, choice C is the correct answer.

If Imports Exceed Exports,then