Asked by
Tyree Wright
on Nov 29, 2024
Verified
Statement I: China and Japan have continued to finance the huge U.S.trade deficit because the large American consumer market allows them to expand their production and create jobs for their citizens.
Statement II: China and Japan finance over half the U.S."twin deficits," the trade and federal budget deficits.
A) Statement I is true and statement II is false.
B) Statement II is true and statement I is false.
C) Both statements are true.
D) Both statements are false.
Twin Deficits
The situation occurring when a country has both a current account deficit and a fiscal deficit, indicating excessive spending.
Trade Deficit
A situation where a country imports more goods and services than it exports, resulting in a negative balance of trade.
- Evaluate the significance of foreign capital inflow into the U.S. market and its implications for the trade deficit.
- Examine reasons and implications of foreign nations financing U.S. consumption and debts.
Verified Answer
JS
Learning Objectives
- Evaluate the significance of foreign capital inflow into the U.S. market and its implications for the trade deficit.
- Examine reasons and implications of foreign nations financing U.S. consumption and debts.