I've been reading my textbook, watching Khan Academy, and Googling to no avail. Can someone please help me with the following questions?
1 - Which of the following is NOT true about the national income identity given by the equation: S+(T-G)=I+CA?
A) If CA is negative and large, a country risks foreigners owning a large piece of its assets.
B) If CA is positive, national saving finances the purchase of our goods by foreign users
C) If CA is negative, our investment exceeds our national savings
D) A negative CA may imply that foreigners have confidence in the U.S. economy
E) None of the above
2 - Which of the following is NOT true about this national income equation: S+(T-G)=I+CA
A) For the current account, CA, to improve, the government may have to run budget surplus
B) A reduction in the trade deficit with one country will simply show up as an increase in a trade deficit with another country
C) For the current account, CA, to improve, we may have to save more to maintain the same amount of investment that includes foreign saving
D) For the current account, CA, to improve, we may have to invest less than otherwise would be the case
E) None of the above