What does it mean when it is said that the United States is running a trade...

What does it mean when it is said that the United States is running a trade deficit? What impact will a trade deficit have on interest rates?

Expert Solution

Trade deficit means the imports exceed the exports . Trade deficit =Total value of Exports-Total Value of Imports

Trade deficit increases the rate of interest . This decreases the value of currency and makes imports less favourable and exports more favourable. This will also increase inflation in future.

jeff jeffy answered 2 years ago

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