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Questions and Answers
What is a consequence of financing a trade deficit by selling off assets?
What is a consequence of financing a trade deficit by selling off assets?
- Increase in foreign claims against South African assets (correct)
- Decrease in foreign claims against South African assets
- Reduction in South Africa's official reserves
- No impact on foreign claims against South African assets
What is a potential benefit of a large surplus on the financial account?
What is a potential benefit of a large surplus on the financial account?
- Reduced foreign lending to South African firms
- More rapid increase in South Africa's production capacity (correct)
- Increased foreign ownership of domestic assets
- Reduced production capacity in South Africa
What is a consequence of a current account deficit for South Africa?
What is a consequence of a current account deficit for South Africa?
- Increase in South Africa's claims against foreign assets
- Increase in both its debt to people abroad and the value of foreign claims against assets in South Africa (correct)
- No impact on South Africa's debt to people abroad
- Decrease in South Africa's debt to people abroad
When can South Africa regain ownership of its domestic assets that have been sold to foreigners?
When can South Africa regain ownership of its domestic assets that have been sold to foreigners?
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What is a potential cost of current consumption gains delivered by current account deficits?
What is a potential cost of current consumption gains delivered by current account deficits?
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Why is a trade deficit considered unfavourable?
Why is a trade deficit considered unfavourable?
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