4. The U.S. trade deficit was about $531 billion, or 3 percent of GDP, in 2015. Some economists argue that this gap is truly frightening because the current account deficit is the amount of money the United States must attract from abroad. If foreign investors stop buying U.S. bonds and stocks, then skyrocketing interest rates, plummeting stock values, and an economic downturn will surely follow.

Others see the gaping current account deficit as a sign of economic vitality. The flipside of a large trade deficit is, after all, a surplus of capital flowing into your country.

a. Is the U.S. current account deficit a sign of impending disaster or a sign of economic health or something in between?

b. How has this unprecedented shortfall affected the U.S.

economy and how will it affect our economic future?

(Post-Keynesian)