Unformatted text preview: lowed to sell their products in U.S. markets, they contend, while foreign govern-ments impede U.S. firms from selling U.S. products abroad. Imagine that you are the president and you want to end these trade deficits. What should you do? Should you try to limit imports, perhaps by imposing a quota on the import of cars from Japan? Or should you try to influence the nation’s trade deficit in some other way? To understand what factors determine a country’s trade balance and how government policies can affect it, we need a macroeconomic theory of the open A M A C R O E C O N O M I C T H E O R Y O F T H E O P E N E C O N O M Y 679...
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- Spring '10
- International Trade, budget deficits, government budget deficits