Chapter 19: Problem 7

Which of the following does not contribute to our huge trade deficit? a) our dependence on automobile travel b) our addiction to consumer goods c) our shrinking manufacturing base d) our huge oil imports e) none of the above

Short Answer

Expert verified

Option e) none of the above is the correct answer, as all other options contribute to the trade deficit in some way.

Step by step solution

Analyze Option a) our dependence on automobile travel

The dependence on automobile travel can increase oil consumption, which in turn increases oil imports. This can contribute to the trade deficit if the country imports more oil than it exports. Therefore, it's essential to look at other options as well.

Analyze Option b) our addiction to consumer goods

The addiction to consumer goods implies that the country is importing more consumer goods than it is producing. This increase in imports without an equivalent increase in exports can cause a trade deficit. This option also seems to be a contributor.

Analyze Option c) our shrinking manufacturing base

A shrinking manufacturing base means that the country is producing fewer goods, and hence might be importing more goods to meet the demands. This situation also contributes to a trade deficit as imports increase without an increase in exports. This option is also a contributor to the trade deficit.

Analyze Option d) our huge oil imports

Huge oil imports directly impact the trade deficit, as the country is spending more on imports and not exporting as much in return. This option is a clear contributor to the trade deficit.

Analyze Option e) none of the above

This option suggests that all the other options contribute to the trade deficit, so selecting this option would mean that there is no option that does not contribute to the trade deficit.

Determine which option does not contribute to the trade deficit

Based on the analysis, option e) none of the above is the correct answer. All the other options contribute to the trade deficit in some way.

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