International Economics

Instructions: Write a Two-page paper double-spaced to answer the question cited below. Make sure to include all the references used at the end of your paper. Do not include any footnotes. Your definitions of all the economic terms used must be clear and precise. Your paper must emphasize all the relevant linkages and interrelationships between the different economic variables used in your answers.

During the 1980s, the U.S experienced “twin deficits” in the Current Account and Federal Budget. Since 1998 the U.S Current Account deficit has grown steadily along with rising government budget deficits.

Do Government Budget Deficits lead to Current Account Deficits? Identify other possible sources of the current account deficits. Do current account deficits necessarily indicate problems to the U.S economy?

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