The consequences of a current account decifit and surplus

The consequences of a current account decifit and surplus:

• Deficit means that a country is consuming more than its producing; if a decifit increases it will reduce AD - lower the economy's output, likely to raise unemployment; put downward pressure on the price level. A rise in the deficit is likely to lead to a fall in the exchange rate and increase the debt of the country

• Surplus means…