EBK ECONOMICS: PRINCIPLES AND POLICY
13th Edition
ISBN: 8220100605932
Author: Blinder
Publisher: Cengage Learning US
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Chapter 37, Problem 6DQ
To determine
Effect of tax cut on
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In 2001, 2002, and 2003, Congress passed the series of tax cuts that President Bush had requested. What effect did this policy likely have on the U.S. trade deficit? Why?
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 combination of fiscal and monetary policies do you think it will take for The United States to fix the debt deficit
Chapter 37 Solutions
EBK ECONOMICS: PRINCIPLES AND POLICY
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- How could an increase in a nation's fiscal deficit increase its trade deficit?arrow_forwardDuring the Great Recession there was a large drop in the US trade deficit. There was also a large increase in the US government budget deficit. Are these two facts related? What else must be going on to have a falling trade deficit and a growing government budget deficit at the same time?arrow_forwardUnder what conditions will a larger budget deficit cause a trade deficit?arrow_forward
- Generally, how does the standard of living in the United States today compare to the standard of living in other countries? To the standard of living in the United States a century ago?The Bureau of Economic Analysis, or BEA, is a government agency collecting various U.S. economy statistics. From the BEA’s website, find data for the most recent year available on U.S. exports and imports of goods and services. Is the United States running a trade surplus or deficit? Calculate the ratio of the surplus or deficit to U.S. exports.There are many people out there providing opinions on the economy. How can differences of opinion about economic policy recommendations be resolved?arrow_forwardImagine you are an economic advisor to the USA government during a severe recession. What specific measures would you propose in terms of government spending, taxes, and transfer payments? Then explain the benefits and purpose of this policy. How do they aim to stimulate economic growth, and reduce unemployment? Are there any potential risks or trade-offs associated with these policy choices?arrow_forwardIn 2018, the U.S. trade had the smallest trade deficit in goods with which of the following countries/regions Group of answer choices Mexico Canada European Union Japanarrow_forward
- Consumers and a fresh round of stimulus money pushed demand for U.S. imported goods to a record high in March, further expanding the trade deficit. The foreign-trade gap in goods and services expanded 5.6% from the prior month to a seasonally adjusted $74.4 billion (Links to an external site.) in March, the Commerce Department said Tuesday. Imports rose 6.3% to $274.5 billion for the month, fueled by higher shipments of items including toys, furniture, cellphones, automobiles and semiconductors. The previous record for imports, on a seasonally but not inflation adjusted basis, was recorded in October 2018 when the U.S. purchased foreign goods and services worth $266.72 billion. Exports rose 6.6% to $200 billion in March, following a one-month decline in February, as supply-chain disruptions caused by winter weather eased. Using the expenditure model what impact will this have on the US GDP? Explain in detail in less than 100 wordsarrow_forwardThe macroeconomic view of a trade deficit implies that, other things equal, the imposition of a tariff will reduce South Africa's trade deficit.arrow_forwardWhat 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?arrow_forward
- How big is the trade deficit relative to overall GDP?arrow_forwardWeek 6: Question Number 6.2. You are an IMF official going to a country whose export earnings are not able to pay for imports. The government has requested a loan from the IMF. Which areas would you recommend the government to cut: (1) education, (2) salaries for officials, (3) food subsidies, and/or (4) tax rebates for exporters?arrow_forwardIf you observed a country with a rapidly growing trade surplus over a period of a year or so,would you be more likely to believe that the country's economy was in a period of recession or of rapid growth? Explain.arrow_forward
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