1. Why might the US not want to narrow the trade deficit?what would be the implications of trying to do so?
2. How could Monetary Policy (raising interest rates) impact the current account deficit? (what is the mechanism by which it lowers it)
3. How could Fiscal policy (increasing taxes/lowering government spending) impact the current account deficit?(what is the mechanism by which it lowers it)
4. What are the costs of engaging in monetary & fiscal policies to close the trade deficit?
5. Why does a country like the US not have to worry about their supply of foreign reserves as to a country like Mexico or Brazil?