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