If the United States Borrows a Large Amount of Money

question 17

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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