Other things remaining constant, higher trade deficits in the United States will lead to _____
A) an increase in U.S. citizens buying foreign securities.
B) an increase in domestic savings in the United States.
C) a decrease in the demand for U.S. dollars.
D) an increase in funds from abroad.
E) an increase in the standard of living of the U.S. residents.

Question

Quizplus · Accepted Answer

Higher trade deficits means that the United States is importing more goods than it is exporting. This requires the country to borrow funds from abroad to pay for the imports, which leads to an increase in funds from abroad.

Other Things Remaining Constant, Higher Trade Deficits in the United