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Government cut a tariff tax on imported goods

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Reference no: EM131914561

Please provided an explanation for the answers to each question. 

If a country's government cut a tariff tax on imported goods, that country's current account balance will likely _______ (assuming no retaliation by other governments).

Answer: decrease

Direct foreign investment into the U.S. represents a:

Answer: capital inflow

A low home inflation rate relative to other countries would _______ the home country's current account balance, other things equal. A high growth in the home income level relative to other countries would _______ the home country's current account balance, other things equal.

Answer: increase; increase

Reference no: EM131914561

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