In fact, the government budget balance can affect the trade balance. As the chapter in Kens's view discusses the net influx of financial investment, Foreign countries often come with a trade deficit, while the net outflow of financial investment comes with a trade surplus. When the government builds a budget deficit with a combination of tax cuts or increased spending, it increases total demand in the economy and increased total demand. Imports are at a higher level. If fixed exports will cause a greater trade deficit, the company will have to do so. That means holding more foreign dollars as Americans buy more imported goods. Foreigners use those dollars to invest in the United States, leading to an influx of foreign investment. One possible source of funding for the budget deficit is that foreigners buy Treasury securities sold by the U.S. government. Therefore, the budget deficit often comes with a trade deficit. In budget deficits and interest rates on fiscal policy, investment and economic growth, budget deficits increase demand in domestic financial capital markets, raising domestic interest rates. Higher interest rates will attract an influx of foreign capital and exchange rates to meet rising dollar demand from foreign investors and lower U.S. dollars supply due to higher interest rates in the United States. When Americans buy less foreign bonds, they sell less U.S. dollars. The depreciation of the US dollar led to a greater trade deficit.
正在翻譯中..