Chapter 29 : Policies to correct imbalances in c/a of b/p

Cards (3)

  • A country with a deficit on its current account will have an outflow of money from the economy, which can lead to inflationary pressures as there are fewer goods available.
  • If a country has a surplus on its current account it means that more money is coming into the economy than going out, this could cause inflation if people start spending their extra income.
  • The current account is the difference between exports and imports