Increased domestic imports and a higher international trade deficit are possible results of government deficits.

Question

Quizplus · Accepted Answer

When a government runs a deficit, it may have to borrow money from other countries, which can result in a higher trade deficit. Additionally, to finance the deficit, the government may increase domestic borrowing, which can lead to a higher demand for imports and hence, increased domestic imports.

Increased Domestic Imports and a Higher International Trade Deficit Are