Chapter 32: Problem 16

The United States began to consistently run current account deficits since \((\mathrm{LOl}, 4)\) a) 1961 d) 1991 b) 1971 e) 2001 c) 1981

Short Answer

Expert verified

d) 1991

Step by step solution

Understand what a current account deficit is

Current account deficit occurs when the value of imports (goods, services, and income) in a country is greater than the value of exports. In simpler terms, it means the country is spending more money on buying foreign goods and services than it is earning from selling its goods and services abroad.

Research the historical data on U.S. current account balance

To find the correct year when the United States began to consistently run current account deficits, we need to gather data on the U.S. current account balance from reliable sources like the Bureau of Economic Analysis US Department of Commerce or the International Monetary Fund. We will investigate the annual data to spot the year when the pattern of running deficits consistently began.

Analyze the historical data

From the historical data, look for the year that marks the beginning of a consistent current account deficit pattern. Carefully analyze the years given in the exercise and check whether the current account deficits were present immediately following the year and if the pattern persisted afterward.

Compare the data with the given options

Compare the year when you identified the beginning of consistent current account deficits with the options provided: 1961, 1971, 1981, 1991, and 2001.

Choose the correct option

From your analysis of the historical data, choose the year that corresponds to the beginning of consistent current account deficits in the United States among the provided options. According to the historical data on the United States current account balance, the United States began to consistently run current account deficits since: d) 1991