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Wednesday, February 3, 2016

Economics Unit 4
Reasons for Current Account Deficit

- Overvalued exchange rates


- Declining competitiveness
- Fast economic growth
- Low savings ratio
- Capital inflows

Problems of Current Account Deficit


1 Potentially unsustainable
2 Foreign claim on UK assets
3 Depreciation
4 Reflection on economic weakness

Current Account Deficit Is Not Necessarily A Problem


1 Finance Investment
2 Inward Investment can be beneficial for economy
3 Floating exchange rate will restore balance
4 Size of deficit