Rapidly growing strong economies often experience trade deficits, whereas economies with sluggish growth often have trade surpluses. Can you explain this puzzle?

*8. In recent years, a substantial share of the domestic capital formation in the United States has been financed by foreign investors. Is this dependence on foreign capital dangerous? What would happen if the inflow of foreign capital came to a halt?

*9. Suppose that the United States were running a current-account deficit. How would each of the following changes influence the size of the currentaccount deficit?

a. a recession in the United States

b. a decline in the attractiveness of investment opportunities in the United States

c. an improvement in investment opportunities abroad