MACROECONOMICS
14th Edition
ISBN: 9781337794985
Author: Baumol
Publisher: CENGAGE L
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Chapter 20, Problem 6DQ
To determine
To state: The effects of the implementation of the tax cuts policy on the country’s
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During 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?
How could an increase in a nation's fiscal deficit increase its trade deficit?
what combination of fiscal and monetary policies do you think it will take for The United States to fix the debt deficit
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- 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_forwardOver 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?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_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_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_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_forwardHow big is the trade deficit relative to overall GDP?arrow_forward
- In 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_forwardFind the revenue deficit???arrow_forwardSketch 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_forward
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