Which is the most accurate statement? (LO2) a) Since our current account deficit is matched by our capital account surplus, we have no problem with respect to our international transactions. b) Foreigners invest all the dollars they receive from our capital account deficit to buy American assets. c) Our current account deficits are declining and should disappear before the year 2015 . d) A declining dollar makes foreign investment in dollar-denominated assets much less attractive to foreigners.

First, let's understand the key concepts involved in this exercise: 1. Current Account: The current account is a record of a country's trade in goods and services, investment income, and transfer payments (such as foreign aid). 2. Capital Account: The capital account is a record of a country's financial transactions involving the purchase or sale of assets, such as stocks, bonds, or real estate. 3. Currency Value Fluctuations: The value of a currency in terms of other currencies can fluctuate based on factors like interest rates, inflation, and economic growth. Currency value fluctuations can impact the attractiveness of investing in assets denominated in a particular currency.

Now let's analyze each statement and determine which is the most accurate: a) Since our current account deficit is matched by our capital account surplus, we have no problem with respect to our international transactions. While it is true that a current account deficit is often offset by a capital account surplus, this statement isn't completely accurate, as a prolonged current account deficit can be problematic for a country in the long term. b) Foreigners invest all the dollars they receive from our capital account deficit to buy American assets. This statement might not be totally accurate as there is no guarantee that foreigners will invest all the dollars they receive in American assets. c) Our current account deficits are declining and should disappear before the year 2015. This statement cannot be verified, as it depends on the specific country, time frame, and economic conditions. d) A declining dollar makes foreign investment in dollar-denominated assets much less attractive to foreigners. This statement is accurate as a declining currency value can make assets denominated in that currency less attractive to foreign investors, as they may experience currency losses when converting their investments back into their home currency.

Based on our analysis, statement (d) is the most accurate: "A declining dollar makes foreign investment in dollar-denominated assets much less attractive to foreigners." This statement is accurate and reflects the impact of currency value fluctuations on the attractiveness of foreign investments.