Some economists argue that the current account deficit in the United States is less problematic than current account deficits in other parts of the world.Identify possilbe reasons why the current account deficit in the United States may be less problematic than current account deficits in other nations.The United States benefits from currency arbitrage.The U.S. economy has a fixed exchange rate policy.In the United States, the current account deficit is offset by a surplus in the capital account.The United States borrows in a currency it controls.The current account deficit is relatively small as a share of GDP, compared with countries facing debt crises.The United States tends to earn more on its foreign investments than foreigners earn on their investments in the United States.

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Answered: Some economists argue that the current…

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter4: The Aggregate Economy

Section: Chapter Questions

Problem 5E

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Some economists argue that the current account deficit in the United States is less problematic than current account deficits in other parts of the world.

Identify possilbe reasons why the current account deficit in the United States may be less problematic than current account deficits in other nations.

The United States benefits from currency arbitrage.

The U.S. economy has a fixed exchange rate policy.

In the United States, the current account deficit is offset by a surplus in the capital account.

The United States borrows in a currency it controls.

The current account deficit is relatively small as a share of GDP, compared with countries facing debt crises.

The United States tends to earn more on its foreign investments than foreigners earn on their investments in the United States.

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