Hi guys, I am reviewing the Econ part and once again found the material very challenging. A lot of the points are given without explanation. Dose anyone feel the same? Whats your strategy learning the material?
Also, a question on Current Account. I see a lot of different definition of current account online and in earlier levels of CFA book. For Level III, what are the components of current account? is it (X-M)+(I-S)+(T-G) Net export + Net investment + Gov Surplus?
I’m looking at Example 11 on page 206
International Macroeconomic Linkages
A large, diversified economy recently instituted a substantial tax cut, primarily
aimed at reducing business taxes. Some provisions of the new law were designed
to stem the tide of domestic firms moving production facilities abroad and
encourage an increase in corporate investment in the domestic economy. There
was no reduction in government spending. Prior to the tax cut, the country had
both a current account deficit and a government deficit.
Questions:
1 What impact is this tax cut likely to have on
a the country’s current account balance?
b the country’s capital account balance?