I1. Trade Accounts. A. Imagine a world at peace. Assume the United States has a Current Account balance of zero. Assume all the United States' trading partners also have Current Account balances of zero. 1. Then, can we assume all the Merchandise Trade balances are also zero? Yes/No. For credit you must defend your answer. 2. Next, consider what would happen if the United States economy began to grow faster than the economies of its trading partners. Incomes rise in the U.S. Business opportunities in the U.S. become much better than those of its trading partners. Then, what would happen to the Current Account balance in the United States? You must explain your answer. Here are your choices: ( Go into surplus. Go into deficit. Stay balanced at zero.) B. Assume the U.S. Current Account balance is zero. Mr. Subaru sells a million dollars' worth of cars to buyers in the United States. He uses the money from that sale to purchase his dream home in Japan. The previous owner of that home in Japan uses the money from the sale of the house to purchase a million dollars' worth of precision machinery made in the U.S. The machinery is shipped to Japan. How will these transaction affect the U.S. Current Account balance? Possible answers: Current Account balance will become positive, become negative, stay the same. You must explain your answer. C. In Part B above, would your answer be different if Mr. Subaru bought his dream home in the U.S. and the U.S. owner of that home used the money to purchase precision machinery for his factory in the U.S.? Possible answers: No, it would not matter. Or yes, it would cause the U.S. Current account to