Explain the increase in the us current account deficit

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In 2005, then Federal Reserve Governor Ben Bernanke, now Federal Reserve chairman, said in a speech: "Over the past decade a combination of diverse forces has created a significant increase in the global supply of saving - a global saving glut-which helps to explain both the increase in the U.S. current account deficit (a broad measure of the trade deficit) and the relatively low level of long-term real interest rates in the world today." Is this statement consistent with the open economy model you have learned?

Reference no: EM13212578

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