A large trade deficit that the United States has with China would be narrowed by a:
A)decline in the value of the U.S. dollar or by Chinese inflation.
B)decline in the value of the U.S. dollar or by U.S. inflation.
C)rise in the value of the U.S. dollar or by Chinese inflation.
D)rise in the value of the U.S. dollar or by U.S. inflation.

Question

Quizplus · Accepted Answer

A decline in the value of the U.S. dollar makes U.S. goods cheaper for foreigners, including the Chinese, potentially increasing U.S. exports to China. Chinese inflation would make Chinese goods more expensive, potentially reducing U.S. imports from China, both of which would help narrow the trade deficit.

A Large Trade Deficit That the United States Has with China