Question

what is the effect of the decrease in demand for U.S. exports on the trade deficit? A) It has had no impact on the trade deficit B) it has eliminated the trade imbalance C) it has contributed to a positive balance of trade D) it has contributed to a negative balance of trade

Answer 1

The correct answer is - D) It has contributed to a negative balance of trade.

The decreasing demand for US exports has had a negative effect on the trade deficit. This kind of situation results in an ever growing imbalance of trade, as the home made products are becoming less demanded, while the importing of goods and products is increasing, constantly making the trade deficit bigger.

That can eventually lead to an economic collapse, economic crisis similar to the Great Depression, as the country will not be able to work in that way forever. The GDP, both the nominal and the per capita, will suffer because of that, which will cause lot of unrest and opposition from the general public.