Assistance with government spending?

Question

What is the connection between an increase in government purchases and the trade deficit? I understand government spending helps the economy and how defiicits work but I cant link the two of them. please help I have read this chapter over and over.

Answer 1

Look at it this way, the US has had a huge trade deficit with Japan over the years to the extent that the US Government has pressured Japan to expand its economy in order to buy more car components from the US. The problem identified by US authorities here is that Japan is selling more goods and services to the US that it is purchasing from Japan. Therefore US Govt purchases of Japanese goods would add to the problem. Also Govt purchases of fore in goods would add to the trade decifit. I hope this helps.