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    Current Account Deficit run by the U.S.

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    The media and others suggest that the current account deficit run by the U.S. is a problem for the economy. What do you think? What action(s) would you advise federal government officials to take on this issue?

    © BrainMass Inc. brainmass.com October 9, 2019, 7:30 pm ad1c9bdddf
    https://brainmass.com/business/accounting/current-account-deficit-run-by-the-u-s-120077

    Solution Preview

    The huge and growing international trade and current account imbalances, centered on the US external deficits and net debtor position, represent the single greatest threat to the continued prosperity and stability of the United States and world economies. They could at any time trigger a large and rapid decline in the exchange rate of the dollar that would initiate sharp increases in US inflation and interest rates, bringing on stagflation at a minimum and quite possibly a deep recession.

    Even in the absence of such a crisis, continued failure to address the imbalances constructively will inevitably lead to a costly and perhaps wrenching adjustment of the US and world economies. They could also lead to a disruption of US trade policy, threatening the openness of the global ...

    Solution Summary

    The following questions are addressed:
    - Is the current account deficit run by the U.S. is a problem for the economy?
    - The media and others suggest that the current account deficit run by the U.S. is a problem for the economy.
    - What do you think? What action(s) would you advise federal government officials to take on this issue?

    $2.19