Question

A balance of payments deficit would be widened by which of the following? I Increased levels of U.S. imports II Decreased sales of U.S. securities to foreign holders III Decreased levels of foreign tourists visiting the United States IV Decreased dividends paid to foreign holders of U.S. securities A. I and III only B. II and IV only C. I, II, III D. I, II, III, IV

Answer 1

A balance of payments deficit would be widened by decreased levels of foreign tourists visiting the United States and by decreased dividends paid to foreign holders of U.S. securities.

Step-by-step explanation:

A balance of payments deficit would be widened by Decreased levels of foreign tourists visiting the United States because it would reduce the amount of money that foreign tourists spend in the United States, thus decreasing the country's overall revenue from tourism.

Additionally, a balance of payments deficit would be widened by Decreased dividends paid to foreign holders of U.S. securities because it would result in less money flowing out of the country to foreign investors.

However, Increased levels of U.S. imports would actually narrow the balance of payments deficit, as it increases the amount of money flowing out of the country to pay for imports. Therefore, the correct choice is A. I and III only.