In the mid-1960s, the United States was running an expansionary fiscal policy to support the war effort in Vietnam. This likely:
A)improved the trade deficit.
B)worsened the trade deficit.
C)left the trade deficit the same.
D)had ambiguous effects on the trade deficit.

Question

Quizplus · Accepted Answer

Expansionary fiscal policy, especially when funding a war, often leads to increased domestic consumption and investment. This can increase imports and decrease exports, thereby worsening the trade deficit.

In the Mid-1960s, the United States Was Running an Expansionary