current account deficit

• What occurs when imports exceed exports?

  The amount of money leaving the country is greater than that entering.
• What does a current account deficit indicate?

  It indicates that the country is spending more on foreign goods than it earns from exports.
• What is the purpose of protectionism?

  To correct the imbalance caused by a current account deficit.
• What is the relationship between imports and exports in a current account deficit?

  • Imports are greater than exports
  • More money leaves the country to support foreign firms
  • Less money enters the country to support domestic firms