ECONOMICS:PRIN.+POLICY-MINDTAP (1 TERM)
14th Edition
ISBN: 9781337912396
Author: Baumol
Publisher: CENGAGE L
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Chapter 36, Problem 6DQ
To determine
Effect of tax cut in US
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How could an increase in a nation's fiscal deficit increase its trade deficit?
Over the past four years, the US trade deficit has
increased to $576.9 billion. Based on your
understanding of what it means to have a trade
deficit, is this number too large? Why or why not?
What are the implications for the short-term and
long-term US economy?
What are some reasons to think that America is obligated to help poor countries? What are some reasons to think that America is not obligated to help poor countries? Is foreign aid worsening our budget deficit?
Chapter 36 Solutions
ECONOMICS:PRIN.+POLICY-MINDTAP (1 TERM)
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Similar questions
- In recent decades, has the U.S. trade balance usually been in deficit, surplus, or balanced?arrow_forwardWhen is a trade deficit likely to work out well for an economy? When is it likely to work out poorly?arrow_forwardWhat is a foreign trade deficit or surplus? How does this affectinterest rates?arrow_forward
- What is the difference between a government deficit and a trade deficit ?arrow_forwardUnited States currently runs a significant trade deficit with the rest of the world. Research an academic journal article regarding some of our trade balances with specific countries and share what you find. For example, with whom do we run the largest deficits, with whom do we have surpluses, etc.? Do you think it is a problem if we run a trade deficit? Why or why not? In answering, keep in mind what impact a trade deficit has on other parts of our balance of payments.arrow_forwardThe balance of trade shows a deficit of $200 million. With the value of exports being $300 million, what should be the value of imports?arrow_forward
- How big is the trade deficit relative to overall GDP?arrow_forwardMindTap - Cengage Learningarrow_forwardIn an economy open to trade, must a government budget deficit always be accompanied by an external sector deficit? Why or why not? Could a government budget deficit lead to a government budget surplus?arrow_forward
- Sketch a diagram of how a budget deficit causes a trade deficit. (Hint: Begin with what will happen to the exchange rate when foreigners demand more U.S. government debt.)arrow_forwardSuppose the US goes into a recession where the economy is not growing very quickly (or is actually shrinking) while the economies of our trading partners remain strong. What will most likely happen to our trade deficit? In your answer, explain what will happen to US exports and US imports and why.arrow_forwardIf a country has a trade deficit, what will occur?Choose one answer. Imports will exceed exports. Exports will exceed imports. Imports and exports will be equal. d. Currency will be devaluedarrow_forward
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