Assume a nation has been running a significant expansionary

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Effect of fiscal policy on trade imbalance

Suppose a country has been running a significant expansionary fiscal policy for many years. Monetary policy has not been particularly expansionary or contractionary. What can you expect to happen to this country's trade balance? What are the costs and benefits of this trade imbalance? If the country wished to correct for its trade imbalance, what fiscal and monetary policies would you suggest this country pursue now?

 

Reference no: EM1334948

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