The trade deficit is the mirror image of the required capital inflows. So why worry about these capital inflows?
A. Trade deficits automatically cause larger budget deficits.
B. Before long, the Germans, Japanese, and other foreigners will own the United States and will be dictating policy to the U.S. government.
C. These capital inflows create debts on which interest and principal payments will have to be made in the future.
D. During the period of trade deficits, personal consumption must be reduced to build up wealth to repay the debt created.
Answer: C
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Which of the following would cause a decrease in the supply of milk?
A) an increase the price of a product that producers sell instead of milk B) an increase in the price of cookies (assuming that milk and cookies are complements) C) an increase in the number of firms that produce milk D) a decrease in the price of milk
Many economists are critical of proposals to pass comparable worth legislation. Which of the following is the best explanation for this criticism?
A) Proposals for comparable worth legislation assume that wages for low-paying women's jobs should include compensating differentials. Economists believe that compensating differentials should be part of the wages for all jobs held by women. B) Proposals for comparable worth legislation call for increases in the wages of jobs held predominantly by women. Economists believe that this legislation should be used to increase the wages of all workers. C) Many economists believe that allowing markets to determine wages, rather than the rules required by comparable worth legislation, results in more efficient outcomes. D) Comparable worth legislation will only lead to efficient market outcomes if women in low-paying jobs suffer from cognitive dissonance.