Question

In the future, based on the opportunity cost for the U.S. workers, companies, and resources, what type of products or services will the country produce? What will continue to make the U.S. "richer" in the future? Consider U.S. resources and how they can best be used.

Answer 1

Increase in exports and decrease in imports in the United States will lead to increase in the net exports and thus improve the trade balance of the country and thus lead to decline in trade deficit of the country. This will help United States as the trade balance of the country will improve.

A bigger trade deficit of the country is a problem for the country as it leads to increase in the current account deficit of the country and thus leads to decline in investor sentiment of the country. This will lead to depriciation of the country's exchange rate and thus decline in foreign investment of the country. Deficit is good if the increased government expenditure is used to finance capital equipments and used as capital expenditure which will generate increase in total revenue later.