The causes and consequences of this trade deficit on the US economy.

Question

More Detailed Tips on Writing Assignment

1.         You should have a Cover Page, with heading as Econ 202 Writing Assignment: US Trade Deficits. You need to write your name and student number in the cover page.

2.         Then in the next page, first write the question before you write answers to it. To answer the first question you could start with the GDP equation: Y=C+I+G+NX, which can be rewritten as: Y-C-G=I+NX, or S=I+NX, or S-I=NX, or S-I=NCO.

So final two equations are:

S-I = NX and

S-I = NCO

From the first equation it seems that a country is in deficit if either saving (S) is too small compare to investment (I) or if investment (I) is too big compare to saving (S).

3.         Then you can insert the graph in slide 10 of chapter 18 PowerPoint, showing how trade deficits are increasing over time in the USA.

4.         Another reason of trade deficit is government budget deficit, meaning higher government spending (G) relative to tax revenue (T) causes trade deficit. This is shown in the diagram of slide 16 in the PowerPoint of chapter 19.

5.         And of course, you should mention other causes and consequences of trade deficits, as mentioned in the readings (I posted 2 readings) or in the textbook.

6.         Then move to a new page and write down the 2nd question before you write answers to it.

7.         Some key points must be included to answer the 2nd questions are the following:

a.         A country with a decent amount saving but with very high investment will experience trade deficit. But such deficit is not too bad because higher investment is expected to pay off in the future by increasing productivity and increasing GDP.

b.         A country with a decent amount investment but with very low saving will also experience trade deficit. But such deficit is too bad because low investment will hurt the country in the future.

c.         Then you can insert the diagram in slide 19 of chapter 18 which shows the deficits in the 1990s in the USA were not caused by low savings but by high investment, whereas the deficits years after 2000 were not caused by high investment but by low saving. So the deficits in the 1990s are not too bad but the deficits in the 2000s are too bad.

d.         You may include other points that you find reasonable.

8.         Please include the diagrams in the text, not in the appendix. There should not be any appendix in the writing assignment.

9.         You should have a have a Reference page with at least 3 references: your text book, PowerPoint slides, 2 readings I have posted.

WRITING ASSIGNMENT

Due: The Day of the Final Exam

The writing assignment constitutes 20% of the final grade for the course. The paper should about 3 pages long with one and a half spacing.

The criteria for determining your grade is as follows: organization, clarity of expression, general exposition of the material, and content.

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.

You do not have to follow any specific format while prepare your writing assignment. However, I prefer that you use 11 font with 1.5 space. Also make sure that you have a reference page for all the sources you have used for your writing assignment.

Finally, as an estimate, answer to each question should be about one and a half page.

https://documentcloud.adobe.com/link/review?uri=urn:aaid:scds:US:f5734c3f-3c01-4f33-9c41-d253418e8ebc

https://documentcloud.adobe.com/link/review?uri=urn:aaid:scds:US:045aba97-a442-470c-9937-1cc8d71e0589

these are the two readings mentioned

https://pdf.zlibcdn.com/dtoken/805f1d5534babe8b5280487a749b06bf/Principles_of_Macroeconomics_by_N._Gregory_Mankiw)_5008090_(z-lib.org).pdf

This is the link to the textbook. let me know if it allows you access. Also, I added powerpoint slides in the file section