Trade deficit-floating exchange rate will adjust to reduce

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Reference no: EM131077953

a) Explain why a stronger dollar could enlarge the U.S. balance of trade deficit. Why could a weaker dollar affect the U.S. balance of trade deficit?

(b) It is sometimes suggested that a floating exchange rate will adjust to reduce or eliminate any current account deficit. Why would this adjustment occur?

Reference no: EM131077953

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