All of the following explain why the U.S trade deficit with Germany would expand, except A-...
All of the following explain why the U.S trade deficit with Germany would expand, except
A- increases preferences for german products
B- Increased interest rates in Europe
C-Increase in prices in the US
HINT: think through how each would affect important from germany and exports to germany.
Homework Answers
Since trade deficit means = export - import is negative
As deficit and surplus are between the two countries only so here US trade deficit will means less export from the US and more important from Germany. that will increase the prefernce of German products and increase of price in the US
It has nothing to do with the rise or fall in the interest rate in the third country or in Europe
So the answer is option B
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