There Is an Intimate Relationship Between a Country's BCA and How

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures. This relationship is given by BCA ≡ X - M ≡ (S - I) + (T - G) . Given this, in order for a country to reduce a BCA deficit, which of the following must occur?

A) For a given level of S and I, the government budget deficit (T - G) must be reduced.
B) For a given level of I and (T - G) , S must be increased.
C) For a given level of S and (T - G) , I must fall.
D) All of the above would work to reduce a BCA deficit.

Correct Answer:

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