Military spending abroad worsens current account deficit Steps:

• Current account deficit occurs when outflows exceed inflows in trade, services, income, and transfers.
• Increasing the deficit requires more outflows or fewer inflows.
• Evaluate options: exports or inflows reduce deficit; foreign spending increases outflows.
• D directly raises transfer outflows, enlarging the deficit.

Why D is correct:

• Military spending abroad counts as a current transfer outflow in the balance of payments, directly increasing the deficit per IMF definitions.

Why the others are wrong:

• A: Boosts service exports, adding credits and reducing the deficit.
• B: Raises tourism inflows (invisible exports), adding credits and reducing the deficit.
• C: Improves export competitiveness, increasing net exports and reducing the deficit.

Final answer: D