7. The chapter described how the United States tried after 1985 to reduce its current account deficit by accelerating monetary growth and depreciating the dollar. Assume that the United States was in internal balance but external balance called for an expenditure-

reducing policy (a cut in the government budget deficit) as well as the expenditure switching caused by currency depreciation. How would you expect the use of monetary expansion alone to affect the U.S. economy in the short and long runs?