Assume a U.S. firm buys (imports) $5 million (in U.S. dollars)
Assume a U.S. firm buys (imports) $5 million (in U.S. dollars) of foreign goods. That transaction by itself increases the trade deficit by $5 million. But, the $5
million will flow back to the United States to purchase either (i) U.S. goods and services or (ii) U.S. assets.
a) How does the way the $5 million comes back to the United States determine whether there will be balanced trade or a trade deficit?
b) How does the U.S. economy benefit from either transaction (the foreign purchase of U.S. goods and services [exports] or the purchase of U.S. assets)?
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Get The Answer Assume a U.S. firm buys (imports) $5 million (in U.S. dollars)
Assume a U.S. firm buys (imports) $5 million (in U.S. dollars)
Assume a U.S. firm buys (imports) $5 million (in U.S. dollars) of foreign goods. That transaction by itself increases the trade deficit by $5 million. But, the $5
million will flow back to the United States to purchase either (i) U.S. goods and services or (ii) U.S. assets.
a) How does the way the $5 million comes back to the United States determine whether there will be balanced trade or a trade deficit?
b) How does the U.S. economy benefit from either transaction (the foreign purchase of U.S. goods and services [exports] or the purchase of U.S. assets)?
Previous answers to this question
This is a preview of an assignment submitted on our website by a student. If you need help with this question or any assignment help, click on the order button below and get started. We guarantee authentic, quality, 100% plagiarism free work or your money back.
Get The Answer