Learning objectives
Explain why a stable current account is a policy objective and when a deficit or a surplus becomes a problem
Analyse how contractionary fiscal and monetary policies reduce a current account deficit by cutting spending on imports, and the cost in output and jobs
Analyse how supply-side policies improve the current account over time by raising productivity and competitiveness
Analyse the effect of tariffs, quotas and other protectionist measures on the current account and evaluate the risk of retaliation
Evaluate which policy best fits a given cause of current account imbalance
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