Which one of the following is not a major factor that contributed to large trade deﬁcits in the United States in the period 2002-2007?
A) a declining saving rate coupled with a rising investment rate in the U.S.
B) a U.S. economy growing faster than its trading partners
C) large trade deﬁcits with OPEC economies
D) ﬂexible exchange rate between the U.S. dollar and the Chinese yuan

Question

Quizplus · Accepted Answer

The flexible exchange rate between the U.S. dollar and the Chinese yuan actually contributed to the trade deficit by making Chinese imports cheaper for U.S. consumers and U.S. exports relatively more expensive for Chinese consumers. A declining saving rate coupled with a rising investment rate, a U.S. economy growing faster than its trading partners, and large trade deficits with OPEC economies were all major factors that contributed to the large trade deficits in the U.S. from 2002-2007.

Which One of the Following Is Not a Major Factor