Huge government budget deficit may result in trade deficit

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1. Twin deficits occurred in the 1980s reveal that huge government budget deficit may result in trade deficit. However, by the late 1990s, the federal budget deficit had moved into surplus, but the current account deficit widened. Can you explain the causes of the widening current account deficit?

2. Are continuous current account deficits sustainable in the U.S.? Please express your thoughts based on the economic knowledge you have learned.

Reference no: EM13818036

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