During the last decade, the United States ran the largest trade deficits in its history. These trade deficits imply:

Question

Quizplus · Accepted Answer

The trade deficit is a component of the current account, which is part of the balance of payments. However, the balance of payments also includes the capital account and the financial account. A trade deficit can be offset by a surplus in these other accounts, keeping the overall balance of payments in equilibrium. Therefore, a trade deficit does not necessarily imply a deficit or surplus in the overall balance of payments.

During the Last Decade, the United States Ran the Largest