Question

Go to the internet and find a news article published within the last three months that discusses trade deficit of the U.S., summarize key points and post in the Discussions area. Discuss the level of the current trade deficit and make a recommendation for addressing the current deficit. Discuss the role that the value of the dollar plays in trade deficits.

Answer 1

In 2017 usa trade deficit was 566 billion. It is higher than 2013 . One of main causes was appreciation of dollar which strengthened 28% between 2014-16 . but deficit is less than in 2006. This means exports are picking up. Consumer products and automobiles contributed to deficit.

One measure to reduce deficit is by depreciation of usa dollar over a period of time but announcing it beforehand to be safe from destabilising speculation. But it will be still be harsh than increasing money. Increasing money supply will also depreciate dollar in a smooth way. But ultimately usa has to increase its efficiency, comparative advantage, innovation, RandD so that exports rise.

If dollar appreciates exports fall and imports rise. This leds to deficit in Bop