The consequences of a current account decifit and surplus

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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 levelA rise in the deficit is likely to lead to a fall in the exchange rate and increase the debt of the country
  • Surplus means…

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