9 Nov 2021
Problem 19
Page 759
Section: CRITICAL THINKING QUESTIONS
Chapter 31: The Impacts of Government Borrowing
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9 Nov 2021
Introduction
Government budget balances can affect the trade balances. A trade deficit is always accompanied by a net influx of foreign financial investment, whereas a trade surplus is always accompanied by a net outflow of financial investment. One of the best ways to explain why budget deficits are linked with trade deficits is through exchange rates.
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