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US Government Current Account Deficit

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US Government Current Account Deficit
A current account deficit measures if a country is a net lender or borrower to the rest of
the world. In the case of an account deficit, it means that a country is a net borrower. Basically, a
current account is composed of the net balance of trade, net transfers from abroad, and net
investment income. Overly, the presence of deficit or surplus current account is either positive or
negative depending on how the finances were used and the proportion of these figures. For
example, when a country is experiencing rapid development, it always runs into an account
deficit. Naturally, this is because the country has a lot of investment opportunities and little
domestic savings to take advantage of these opportunities. Consequently, foreign investors can
provide the capital needed to finance these investments.
On the contrary, a long and persistent current account deficit is an indication of a strong
domestic consumption that is not taking responsibility to repay debtors. From this perspective, a
critical look at the US government policies can form a good basis for the assessment of the
impact of the country’s current account deficit. Overly, however, the US economy has been
productive in the recent years which has enabled it to properly handle the existing current
account deficit.
Moreover, even with the emergence of large economies such as India and China,
investors will be slow to pull out their finances from the US. Notably, China is a large
contributor to US current account deficit, and by it demanding for quick repayment of its

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Surname 1 Student Tutor Course Date US Government Current Account Deficit A current account deficit measures if a country is a net lender or borrower to the rest of the world. In the case of an account deficit, it means that a country is a net borrower. Basically, a current account is composed of the net balance of trade, net transfers from abroad, and net investment income. Overly, the presence of deficit or surplus current account is either positive or negative depending on how the finances were used and the proportion of these figures. For example, when a country is experiencing rapid deve ...
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