Originally Posted by DA60
#1 Reduction of a trade deficit having postive effects on the economy only works through a Keynesian perspective (the exports raise demand).
#2 Are you saying a stronger dollar would actually help the trade defict? How do you figure that is true? I mean, making american goods seem more expensive relative to foriegn goods would increase the deficit.
Also, we know that deficit spending tends to increase trade deficits. When foriegnors buy government bonds, they must do that with dollars. Thus, more bonds being sold -> more demands for dollars -> stronger dollar -> more trade deficit
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