Why has the large U.S. current account persisted?
A) The supply of dollars on the foreign exchange market has fallen.
B) The foreign exchange value of the dollar has not decreased.
C) Foreign investors are reluctant to invest in U.S. real and financial assets.
D) Foreign investors have refused to hold large quantities of dollars.

Question

Quizplus · Accepted Answer

The large U.S. current account deficit has persisted in part because the foreign exchange value of the dollar has not decreased significantly. A strong dollar makes U.S. exports more expensive and imports cheaper, contributing to a larger current account deficit. Despite the deficit, the dollar remains strong due to various factors, including its role as a global reserve currency and continued foreign investment in U.S. assets.

Why Has the Large U.S. Current Account Persisted