Given the current account bilateral surplus of Germany with the US, one might say that German savers will be financing President Biden’s infrastructure program. Explain the economics underlying this statement using the concepts we have studied. Why is being a “reserve currency” helpful in this process?

Answer rating: 100% (QA)

1 Trade Surplus and Financing Infrastructure A trade surplus means that a country in this case Germany exports more goods and services than it imports This leads to a surplus of foreign currency reser... View the full answer