The government budget deficit and the trade deficit are often called the "twin deficits." Explain why this name applies, and why it is not always accurate

What will be an ideal response?


All other things equal, an increase in government spending that is not funded by an increase in taxes will result in an increase in the trade (or current account) deficit. However, it is not necessarily the case that in times of rising budget deficits, the trade (or current account balance) will always worsen. For example, during an economic recession, most countries experience government budget deficits. State, local, and federal governments all saw dramatic increases in their deficits from 2007 to 2010 as unemployment rose and tax collections fell. Nevertheless, the U.S. current account balance improved slightly due to the fall in consumption and the decline in spending on imports.

Economics

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In a Dutch auction, the ________ wins the good

A) bidder who bids up to his value for the good B) bidder who stops the auction C) bidder with the lowest value for the good D) second bidder

Economics

Private information is a situation in which

A) two parties to an exchange have information that is available to outsiders if they ask. B) one party to an exchange has information that is not available to the other. C) the marginal cost of a person's obtaining additional information is zero. D) the marginal cost of making information available to one more person is zero.

Economics

If a typical firm in a perfectly competitive industry is incurring losses, then

A) some firms will enter in the long run, causing market supply to increase and market price to rise increasing profit for all firms. B) some firms will exit in the long run, causing market supply to decrease and market price to fall increasing losses for the remaining firms. C) some firms will exit in the long run, causing market supply to decrease and market price to rise increasing profits for the remaining firms. D) all firms will continue to lose money.

Economics

Refer to the graph below. It shows the total product (TP) curve. At which point is the marginal product zero?




A. Point a
B. Point b
C. Point c
D. Point d

Economics