Some economists believe that the high U.S. trade deficit should not be a concern because the:
A)inflow of financial capital will finance new investment, in turn producing more goods in the future to reverse the deficit without serious disruptions to the economy.
B)inflow of financial capital will finance more consumption, and the trade deficit will correct itself.
C)inflow of financial capital will finance new investment that will produce more goods in the future, but the economy will face a significant economic distress.
D)long run effects of the trade deficit are correctly anticipated, and therefore, we will observe no serious disruptions in the economy.

Question

Quizplus · Accepted Answer

A) The inflow of financial capital financing new investment can lead to the production of more goods in the future, potentially reversing the deficit without causing serious disruptions to the economy. This is a common argument among some economists who view the trade deficit in a less negative light, emphasizing the potential for future growth and adjustment.

Some Economists Believe That the High U