The emergence of the United States as a net debtor country implies that

Question

Quizplus · Accepted Answer

Option A is correct because as a net debtor country, the United States will have to pay investment income to foreign creditors. To do so, it will have to generate sufficient export sales to earn foreign currency that can be used for these payments. Option B is correct because the dollar will have to depreciate more than otherwise to offset the impact of the growing amount of investment income flowing out of the country. Therefore, both A and B are correct, making option D the best choice. Option C is incorrect because the real income of Americans is unlikely to decline solely because of the emergence of the United States as a net debtor country.

The Emergence of the United States as a Net Debtor