The United States Trade Deficit

Paper Summary:

Hearing media reports of America's trade deficit most people are led to believe that it represents a drain on our economy and is caused by unfair trade practices of other nations. This paper explains why these notions are not entirely true. Both the upside and the downside of the trade deficit are discussed. It explains why foreign investments are the driving force behind the trade deficit, why protectionist policies are not effective in reducing it, and why it is part of a growing economy. It examines the potential risk inherent in an ongoing trade deficit and discusses what our government could do to bring it under control.

From the Paper:

"The United States' trade deficit, also known as the current account deficit, is a measure of the balance of the flow of goods, services, and investments between the United States and the rest of the world. In other words it is the difference between how much we are selling to the rest of the world and how much we are buying from the rest of the world. A country that is selling more than it is buying is said to have a trade surplus. A country that is buying more than it is selling is said to have a trade deficit. The United States has been running a trade deficit for many years and in recent years it has been rising rapidly."

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• Research Paper # 59809 : "Living and Working with NAFTA in the United States"

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