Which of the Following Is True About How Trade Deficits

question 134

Multiple Choice

Which of the following is true about how trade deficits and government budget deficits are related?

• A) The trade deficit leads to a reduction in investment that leads to a government budget deficit.
• B) The trade deficit leads to a decline in imports relative to exports that leads to a government budget deficit.
• C) The government budget deficit leads to higher interest rates that will lead to a trade deficit.
• D) The government budget deficit leads to lower interest rates that will lead to a lower trade deficit.

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Guidelines and standards for financial accounting and reporting in the United States issued by the Financial Accounting Standards Board.

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