Suppose a country that had balanced trade began to run a trade deficit. At the same time, consumption as a share of GDP increased but the investment share did not. Do you think there was an increase in capital deepening?
A. Yes, because the trade deficit can be used to purchase more capital.
B. Yes, because investment must have fueled the trade deficit.
C. No, because the country initially had balanced trade.
D. No, because consumption, not investment, has fueled the trade deficit
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