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Chapter 2: Q.8 (page 97)

The U.S. economy borrowed heavily from the British in the nineteenth century to build a railroad system. Why did this make both countries better off

Short Answer

Expert verified

Heavy interest rate lead to the improvement in both the nations.

Step by step solution

01

Step 1. Introduction

Trade refers to the exchange of goods, services and funds. In a trade transaction, both the nations are benefited by trade.

02

Step 2. Explanation

The U.S economy made both nations better off because the British were able to obtain high-interest rates by lending to Americans, and were thus benefited. The Americans benefited because railroads infrastructure helped in further economic growth by facilitating the transportation of goods and people.

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