During Recent Times, the United States Has Been Running a Trade

question 120

Multiple Choice

During recent times, the United States has been running a trade deficit (our exports of goods and services have been less than our imports of goods and services) . Which of the following is true regarding these trade deficits?

• A) They were primarily caused by rapid economic growth in the United States stimulating imports and also the attractiveness of the United States as a place to invest causing a capital inflow.
• B) These trade deficits put the United States in debt to foreign economies and thus weaken future economic conditions in the United States.
• C) These trade deficits are evidence that other countries practice unfair trade against the United States because under fair trade exports equal imports to another country.
• D) None of the above are true regarding the trade deficits of the United States.

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Definitions:

Credibility

The quality of being trusted and believed in, often based on a reputation for honesty and reliability.

Indexed

A term referring to the adjustment of income, benefits, or prices in accordance with changes in a price index, typically to preserve purchasing power.

Inflation

A sustained increase in the general price level of goods and services in an economy over a period of time, leading to a decrease in the purchasing power of money.

Fed Tightened

Refers to the Federal Reserve's actions to reduce the money supply and raise interest rates to control inflation.