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mention three steps taken to reduce the trade deficit ?
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mention three steps taken to reduce the trade deficit ? Related: Chap...
Three ways to reduce the trade deficit are:
1 Consume less and save more. If US households or the government reduce consumption (businesses save more than they spend), imports will drop and less borrowing from abroad will be needed to pay for consumption. This means that consumption taxes—like those that nearly all other countries in the world have—could help reduce the deficit, by discouraging consumption, increasing saving, and reducing the government deficit. In contrast, an unfunded tax cut, such as the one proposed by the administration, will expand the deficit because the government will be consuming more relative to its earnings.
2 Depreciate the exchange rate. Trade deficit reversals are typically driven by a significant real exchange rate depreciation. A weaker dollar makes imports more expensive and exports cheaper and improves the trade balance. Given the dollar is the world's reserve currency, and still regarded as the safest for investors, it tends to run stronger than other currencies. But when foreign governments actively push the dollar up to maintain their surpluses, the United States could counteract intervention by selling dollars and buying foreign currencies. The administration could also encourage the adoption of other major currencies, such as the euro, yen, or renminbi, as alternative reserve currencies. A weaker dollar would be good for the US economy, but relinquishing the role as the dominant currency would reduce the power of the United States in global markets and the seigniorage (profit) earned.
3 Tax capital inflows. One of the reasons that the United States runs a trade deficit is because borrowing from abroad is cheap and easy. If it were more expensive, US citizens and the government would borrow less. A tax on (non–foreign direct investment) capital inflows that rises with the size of the inflow could reduce excessive borrowing for consumption and help close the government imbalance. While some worry that capital controls could distort asset prices and reduce investment, they could also curb excessive speculative investment, such as happened before the financial crisis.
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mention three steps taken to reduce the trade deficit ? Related: Chapter Notes - International Trade, Class 12, Geography
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mention three steps taken to reduce the trade deficit ? Related: Chapter Notes - International Trade, Class 12, Geography for Humanities/Arts 2024 is part of Humanities/Arts preparation. The Question and answers have been prepared according to the Humanities/Arts exam syllabus. Information about mention three steps taken to reduce the trade deficit ? Related: Chapter Notes - International Trade, Class 12, Geography covers all topics & solutions for Humanities/Arts 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for mention three steps taken to reduce the trade deficit ? Related: Chapter Notes - International Trade, Class 12, Geography.
mention three steps taken to reduce the trade deficit ? Related: Chapter Notes - International Trade, Class 12, Geography for Humanities/Arts 2024 is part of Humanities/Arts preparation. The Question and answers have been prepared according to the Humanities/Arts exam syllabus. Information about mention three steps taken to reduce the trade deficit ? Related: Chapter Notes - International Trade, Class 12, Geography covers all topics & solutions for Humanities/Arts 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for mention three steps taken to reduce the trade deficit ? Related: Chapter Notes - International Trade, Class 12, Geography.
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