Question 1: The US Economy is experiencing a huge trade deficit over last few decades. Explain the causes and consequences of this trade deficit on the US economy.

Question 2: Under what circumstances the trade deficit is really bad and under what circumstances the trade deficit is not too bad? Explain.

Tips: A good understanding of chapter 18 will really help you to answer these questions. Chapter 19 will be helpful too. I suggest that you read chapter 18 (and also 19) thoroughly from your textbook.

When you answer these questions, please make sure that you include necessary graphs and equations.