Question

We argued that when the economic growth in the US is greater than the (economic) growth rates of our trading partners, the trade deficit in the US should get larger, all else constant.
a. True
b. False

Answer 1

Answer:

The correct answer is the option B: False.

Explanation:

To begin with, given the fact that the economic growth of the United States is greater than the economic growth rates of its trading partners then the trade deficit in the US should get smaller, all else constant due to the fact that the economy is growing at a level that is higher than does of the partners and therefore that when that happens the country will be in a better position and the production of it will increase as expected and that will impact positively in the deficit by reducing it to small amounts.