To eliminate the trade deficits in the late 1990s would have required, in addition to the reduction of the federal budget deficit, an increase in
A)investment spending.
B)the exchange value of the dollar.
C)the U.S.price level.
D)the saving rate.

Question

Quizplus · Accepted Answer

To eliminate trade deficits, increasing the saving rate is essential because it reduces domestic consumption and increases the availability of funds for investment in productive assets, making the economy more competitive internationally. Reducing the federal budget deficit alone wouldn't address the underlying issue of insufficient savings leading to excessive imports over exports.

To Eliminate the Trade Deficits in the Late 1990s Would