If _________________, the country's current account balance will deteriorate. a.a country receives more dividends from its overseas investmentsb.a country receives less dividends from its overseas investmentsc.a country pays less dividends to foreign investorsd.Both (a) and (c) are correct.e.Both (b) and (c) are correct.
Question
If _________________, the country's current account balance will deteriorate. a.a country receives more dividends from its overseas investmentsb.a country receives less dividends from its overseas investmentsc.a country pays less dividends to foreign investorsd.Both (a) and (c) are correct.e.Both (b) and (c) are correct.
Solution
The country's current account balance will deteriorate if a country receives less dividends from its overseas investments or if a country pays less dividends to foreign investors. Therefore, the correct answer is e. Both (b) and (c) are correct.
Here's why:
The current account balance is a measure of a country's trade where the value of the goods and services it imports is subtracted from the value of the goods and services it exports. The balance also includes net income, such as interest and dividends, as well as transfers, like foreign aid, though these components are typically a smaller percentage of the overall current account.
a) If a country receives more dividends from its overseas investments
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