Large national budget deficits do not cause large trade deficits. If they did, countries with the largest budget deficits would also have the largest trade deficits. In fact, when deficit figures are adjusted so that different countries are reliably comparable to each other, there is no such correlation.
If the statements above are all true, which of the following can properly be inferred on the basis of them?
(A) Countries with large national budget deficits
tend to restrict foreign trade.The passage states that no large trade deficits are caused when there is a large budget deficit...that should not be taken to imply such countries restrict trade.
(B) Reliable comparisons of the deficit figures of one country with those of another
are impossible.The passage says otherwise.
(C) Reducing a country’s national budget deficit will not necessarily result in a lowering of any trade deficit that country may have.
Correct. Budget deficit is not correlated with trade deficit so its not reasonable to expect that changing one will affect the other.
(D) When countries are ordered from largest to smallest in terms of population, the smallest countries generally have the smallest budget and trade deficits.
There's no clear indication about how the size of the country is related to budget and trade deficits. e.g. a small country could certainly have a very large budget and trade deficit
(E) Countries with the largest trade deficits
never have similarly large national budget deficits.
Budget deficits and trade deficits are not correlated but that doesn't mean a country can't have both of these large deficits.
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