Question

Calculate the percentage change in the United States current account deficit on the balance of payments between 1998 and 2006. a. The current account deficit increased by 42.5%. b. The current account deficit decreased by 18.3%. c. The current account deficit increased by 29.8%. d. The current account deficit decreased by 36.7%.

Answer 1

The current account deficit increased by 29.8%. Thus the correct option is (c).

Step-by-step explanation:

The percentage change in the United States current account deficit between 1998 and 2006 can be calculated using the formula:

`\[ \text{Percentage Change} = \frac{(\text{New Value} - \text{Old Value})}{|\text{Old Value}|} * 100 \]`

Let's denote the current account deficit in 1998 as
`\(A_(1998)\)` and in 2006 as
`\(A_(2006)\).`Thus the correct option is (c).

`\[ \text{Percentage Change} = ((A_(2006) - A_(1998)))/(|A_(1998)|) * 100 \]`

Now, plug in the given values:

`\[ \text{Percentage Change} = ((A_(2006) - A_(1998)))/(|A_(1998)|) * 100 = ((A_(2006) - A_(1998)))/(|A_(1998)|) * 100 \]`

Comparing this formula with the answer choices, the correct percentage change is 29.8%, which aligns with option c.

Therefore, the accurate answer is c. The current account deficit increased by 29.8%.

This indicates a nearly 30% increase in the current account deficit from 1998 to 2006. Economic factors such as trade imbalances, capital flows, and exchange rates may have contributed to this change. It is crucial to consider these shifts in the context of global economic conditions during the specified period.