Answer to Question #309012 in Microeconomics for Kinza Tariq

Question

5. Summarize the behavior of U.S. federal government budget deficits and U.S. merchandise trade deficits since 1953. Does this behavior suggest a relationship between the two defi cits? Perhaps at some times and not at others?

Answer 1

The behavior of government has been one that has been driving the country o a larger deficit of the federal government. This practice significantly reduces the national savings rate thereby increasing the trade deficit in the country.