The United States finances current account deficits largely with dollars and,as a result,faces almost no constraint on its ability to run deficits.

Question

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This statement is true. The United States can finance its current account deficits largely with dollars because the U.S. dollar is widely accepted as a reserve currency and is the primary currency used in international trade. As a result, the U.S. can simply print more dollars to pay for its imports, and other countries are willing to hold onto those dollars as a store of value or to use them to purchase U.S. exports. This means that the U.S. faces little constraint on its ability to run current account deficits, as it can always find buyers for its dollars on the international market.

The United States Finances Current Account Deficits Largely with Dollars