A country implements policies that are expected to increase taxes by €100 million, increase government spending by €50 million, and reduce investments and private sector savings by €25 million each. As a result, the country's current account balance will most likely:
A is correct.
CA = Sp - I+ (T-G- R)
CA = Current account balance
Sp = Private sector savings
I = Investments T = Taxes
G = Government spending R = Transfers
∆CA = -25 - (-25) + (100 - 50 - 0) = 50.