How does the increase cost of petroleum effect the U.S. balance of payments?
However, the increase in the cost of petroleum from the Arab states (1973-74) had a negative effect on the balance of payments in the United States and most countries in Western Europe. In addition, tight money policies and high deficits adversely affected the savings rate in the United States in the 1980s and caused the balance of payments to decline even further. As a result, the United States looked to foreign borrowing to fill the gap, but the interest payments only increased the shortfall in the balance of payments. In the late 1990s and 2000s the U.S. balance of payments reached record negative levels.
