What can be a consequence of a deficit funded by FDI?

The choice indicating that deficit funded by foreign direct investment (FDI) promotes stronger economic growth is accurate because FDI infusions typically provide the capital necessary for domestic investment that may not be available otherwise. When foreign investors put money into a country, they often bring not just capital, but also expertise, technology, and management skills, which can enhance productivity and drive growth.

FDI can lead to the establishment of new businesses, improvement in infrastructure, and increased employment opportunities, all of which contribute positively to economic development. Moreover, the long-term effects of FDI can support balance of payments in the long term, as successful investments can generate returns that contribute positively to a country’s economic health.

While the other options represent potential risks or scenarios that could arise from a deficit financed by other means, they do not capture the positive role that FDI can play in fostering stronger economic growth.