Describe only four (4) factors that create a current account deficit Essay

Describe only four (4) factors that create a current account deficit. Leave a space between each factor - Essay Example Deficit therefore implies that the value of the payment for the imports is greater than the receipt from the exports. The factors responsible for a current account deficit are:- Decline in domestic savings The domestic savings of a country is the path of increasing investments as in economics savings is considered to be identical to investments. If there is a continuous decline in the savings of a particular country then the scope of investment will causes an increase in the real interest rate of the country. Increase in the domestic interest rate (real) in turn attracts more foreign investment in the country as the scope of return is expected to be high. With increasing foreign investment the demand of the home currency in the foreign exchange market also increases because of the need of  Ã‚   currency conversion. This creates an upward pressure on the value of the domestic currency in comparison to the foreign currencies. Moreover, with the decrease in savings as a percentage of the total Gross Domestic Product of the country, consumption increases. Thus the demand for goods and services in the economy increases and if the domestic producers fail to meet up the increasing domestic demand of the country the import of the country increases resulting in a deficit in the current account. (Arnold).

Political science Essay Example | Topics and Well Written Essays - 250 words - 6

Political science - Essay Example f leadership becomes sparse then individuals will focus on personal objectives and nobody will consider or work towards communal objective for the betterment of their society. Autocratic leaders tend to display inflexible behaviour to their subordinates and demand obedience in all regard. Neither, they consider suggestions from their subordinates nor they belief in equality of any kind. Moreover, these leaders belief in supervision of their subordinates for efficacy of work in their organisations or teams. Lassie-Farie leaders submit all the privileges and control to their subordinates. Subordinates have the liability to determine any course of action and leaders get along with their ideas and plans. However, it is essential for such leaders to have specialized and skilled team workers to progress. Innovative leaders are quick to change and adapt new ideas, their teams are in a constant process of progressing and changing. These leaders inspire their subordinates to share ideas, develop strategic plans and develop new skills. Such leaders produce an environment where change is welcome and is supported by the leaders (Bass,