Hey there! Sign in to join this conversationNew here? Join for free
    • Thread Starter
    Offline

    0
    ReputationRep:
    Not sure about this question: Explain why the current account is often expressed as a percentage of GDP?
    Offline

    0
    ReputationRep:
    because when you want to compare the current account surplus or deficits of countries a country with a big gdp a deficit will be relatively alot smaller than if a county with a small gdp had the same deficit it would be more of a problem so if you measure it against GDP you have a measure of relative deficit or surplus. I hope this helps
    • Thread Starter
    Offline

    0
    ReputationRep:
    (Original post by icyfox101)
    because when you want to compare the current account surplus or deficits of countries a country with a big gdp a deficit will be relatively alot smaller than if a county with a small gdp had the same deficit it would be more of a problem so if you measure it against GDP you have a measure of relative deficit or surplus. I hope this helps
    Surely if a country has a high GDP then they would be inclined to import more therefore leading to a current account deficit?
    Offline

    0
    ReputationRep:
    maybe depending on wether the country has a high propensity to consume imported goods but that is irrelevant to his question his question was why is the current account expressed as a percentage of GDP and the reason is so that when comparing economies you have an idea of the relative deficit or relative surplus of the current account because GDP is a good measure of the size of an economy for example if your adding up test marks 55 might be a good mark if the test is out of 60 but if the test is out of 120 then it is not so good so it would be better to compare a percentage to know how well you've done this is what this measure is trying to do.
    • Thread Starter
    Offline

    0
    ReputationRep:
    (Original post by icyfox101)
    maybe depending on wether the country has a high propensity to consume imported goods but that is irrelevant to his question his question was why is the current account expressed as a percentage of GDP and the reason is so that when comparing economies you have an idea of the relative deficit or relative surplus of the current account because GDP is a good measure of the size of an economy for example if your adding up test marks 55 might be a good mark if the test is out of 60 but if the test is out of 120 then it is not so good so it would be better to compare a percentage to know how well you've done this is what this measure is trying to do.
    Thank you
 
 
 
  • See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  • Poll
    Would you like to hibernate through the winter months?
  • See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  • The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

    Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

    Quick reply
    Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.