Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 10: Q 40. (page 267)

What is more important, a country’s current

account balance or GDP growth? Why?

Short Answer

Expert verified

GDP growth is more important.

Step by step solution

01

Step 1. Definition

Gross domestic product refers to te value of all the finished goods and services manufactured in a fixed time period.

02

Step 2. Explanation

Because GDP represents the health of an economy so it is more important. Higher GDP means improvement in the economy, high employment, higher rates of wages and in negative GDP opposite of this will happen.

The current account balance tells us that the economy is in trade surplus or trade deficit but it doesn’t talk about the health of the economy. So that’s why GDP growth is comparably more important than the current account balance.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

If imports exceed exports, is it a trade deficit or a trade surplus? What about if exports exceed imports?

Is it better for your country to be an international

lender or borrower?

What is the difference between trade deficits and balance of trade?

What are the main components of the national savings and investment identity?

If the trade deficit of the United States increases, how is the current account balance affected?
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free