Principles of Macroeconomics / Unit 15 MAC 1411 short lesson, about 20 seconds
Twin Deficits Are Cousins
Captions available
The idea
The budget deficit and the trade deficit are called twin deficits, and the name overstates the link. They rose together in the mid eighties, but in the nineties a surplus sat alongside a widening trade deficit.
In practice
The identity has other terms, and any of them can move instead.
Where people slip
So cutting a budget deficit does not reliably cut a trade deficit.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Unlocks
- Nothing yet depends on this.
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