Which of the following accurately reflects the pattern of the U. S. current account balance during the periods: 1991; the late 1990s through to the mid-2000s; and 2009 following the onset of recession?

a. larger deficit; tiny surplus; surplus declined

b. tiny surplus; larger deficit; deficit declined

c. surplus declined; larger deficit; tiny surplus

d. larger deficit; surplus declined; tiny deficit

Question

Business

Ezekiel Robbins

21 December, 10:26

Which of the following accurately reflects the pattern of the U. S. current account balance during the periods: 1991; the late 1990s through to the mid-2000s; and 2009 following the onset of recession?

a. larger deficit; tiny surplus; surplus declined

b. tiny surplus; larger deficit; deficit declined

c. surplus declined; larger deficit; tiny surplus

d. larger deficit; surplus declined; tiny deficit

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Answers (1)

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Thomas Glass · Answer 1

B) tiny surplus; larger deficit; deficit declined

Explanation:

A country's current account balance includes trade balance, net income, direct payments and international transfers of capital.

During 1991, the US economy was ending a recession but the recovery was very mild compared to other post war recessions (first Gulf War) since unemployment didn't lower.

During the 1990s the US economy was growing strongly and steadily. Clinton's presidency is remembered as having a sustained economic boom with low unemployment, low inflation, rising productivity and surging stock markets.

But then during the early 2000s the US economy entered a recession that technically lasted only a year, but the stock markets and labor markets were extremely depressed for a couple of years. The second Gulf War created a large deficit.

Finally during 2009 after the Great Recession ended, the government's deficit started to lower since the economy started to grow again and government revenue increased.