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“United States has absolute advantage over many countries in production of most goods and services. Yet, the country is running the record trade deficit year after year. The current trade deficit is about six percent of the country’s GDP. Is it a problem? Why or why not?The “United States has absolute advantage over many countries in production of most goods and services. Yet, the country is running the record trade deficit year after year.” Well……… even though the United States has many natural resources and the ways and means to use them in manufacturing, it cannot provide its people with all that they want or need. For this reason, the United States participates in international trade, exchanging goods and services with other nations. Without international trade, goods would either cost more or not be available. Trade allows countries to specialize in the production of those products that it can produce most efficiently. So with that said, is it a problem that the current trade deficit is about six percent of the country’s GDP? GDP is the value of all goods and services produced in the United States. Should 6% be a concern? I would say no however some would beg the difference (disclosure: I’m NOT an economist). U.S. exports add to GDP because the products are made in the United States and shipped abroad. By contrast, imports reduce GDP because the government considers imports a substitute for what could have been produced in the United States.I need a fresh solution from student’s answer above.
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