What are some of the suggested remedies for the U.S. trade deficits? What remedies have been attempted? What remedies are left to try?
What will be an ideal response?
At certain points in the business cycle, the United States could attempt to reduce the trade deficit by changing the mix of fiscal policy and monetary policy. Specifically, if expansionary monetary policy is used at the same time as contractionary fiscal policy, we would see lower interest rates in the U.S., depreciation of the dollar, and a decrease in the trade deficit. However, such contractionary fiscal policy was out of the question given during the Great Recession. In addition, the United States can encourage its trading partners to stimulate their economies thereby increasing U.S. exports. Another method that could be used would be to increase the personal saving rate in the United States. This has been very difficult to accomplish but movement to a consumption tax such as the proposed FairTax would provide an incentive toward greater saving. Lastly, a reduction of tariffs and quotas would actually improve the U.S. trade balance. Such trade restrictions do decrease imports; however, they also lead to appreciation of the dollar and retaliatory tariffs from trading partners.
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a. a leftward shift of the saving schedule. b. a rightward shift of the saving schedule. c. no shift of the saving schedule. d. a rightward shift of the investment schedule.
Bank A holds $1 million in required reserves and the required reserve ratio is 9 percent. It follows that Bank A holds checkable deposit liabilities that total approximately
A) $111 million. B) $11.11 million. C) $90 million. D) $900 million.
The governmental expense of a farm price support tends to increase as the price of the good rises.
Answer the following statement true (T) or false (F)
The "paired observation" of (12, 6 ) means
A) x = 12, y = 6. B) x = 6, y = 12. C) x = any multiple of 12, y = any multiple of 6. D) the origin is at 12 and 6.