Which of the following factors has helped maintain the large U.S. trade deﬁcits over the years?
A) a decline in investment
B) capital and ﬁnancial account surpluses
C) a decrease in economic growth
D) an increase in U.S. net exports

Question

Quizplus · Accepted Answer

Capital and financial account surpluses have helped maintain the large U.S. trade deficits over the years. When foreign investors purchase U.S. assets, such as stocks or real estate, it creates a capital and financial account surplus. This influx of foreign investment can help offset the trade deficit, as the money from foreign investors can be used to purchase U.S. exports or pay for U.S. imports. However, this is not always sustainable, as it can make the country more vulnerable to capital flight, which can lead to a drop in the value of the U.S. dollar and an increase in borrowing costs.

Which of the Following Factors Has Helped Maintain the Large