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Chapter 32: Q. 21 (page 782)

What are the major issues with regard to trade imbalances for the U.S. economy?

Short Answer

Expert verified

There are the major issues like unemployment, environmental dangers, unfair labor practices etc.

Step by step solution

01

Major issues with regard to trade imbalances  

There are two major issues involving in trade imbalances

one is what will happen with the large U.S trade deficit and whether they will come down gradually or with a rush.

the other is whether smaller countries around the world should take some steps to limit flows of international capital.

02

Fundamental causes of trade imbalances in U.S economy

The fundamental cause of a trade deficit is an imbalance between a country's saving and investment rates.

Harvard's Martin explains , the reason for the deficit can be boiled down to the United States as a whole spending more money than it makes , which results in a current account deficit.

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