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If the United States Borrows a Large Amount of Money

Question 43

Multiple Choice

If the United States borrows a large amount of money from other countries to pay for a trade deficit,


A) this will hurt the U.S. economy unless the United States is able to pay off the debt by increasing manufacturing exports.
B) this will necessarily slow the U.S. growth rate, compared to a situation in which the United States has a trade surplus.
C) this is not necessarily a problem if the economy is growing fast enough to have future income to pay back the accumulated debt.
D) American firms will have to repay the debt with shares of stock or real estate, which will put American firms at a disadvantage compared to foreign firms.

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