Find current account deficit

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The equation SP = I + CA - $9 = I + CA -(T - G) = I + CA + (G - T) tells us that to reduce a current account deficit, a country must increase its private saving, reduce domestic investment or cut its government budget deficit. Nowadays, some people recommend restrictions on imports from China (and other countries) to reduce the American current account deficit. How would higher U.S. barriers to imports affect its private saving, domestic investment and government deficit? Do you agree that import restrictions would necessarily reduce a U.S. current account deficit?

Reference no: EM133066056

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