Final answer:
The major issues with trade imbalances for the U.S. focus on the trade deficit and how it will adjust over time as well as the implications for smaller countries managing capital flows to prevent economic instability. So, the correct answer is option c.
Step-by-step explanation:
The major issues regarding trade imbalances for the U.S. economy are primarily concerned with the trade deficit. A trade deficit occurs when a country's imports of goods and services exceed its exports, and the United States has been running large trade deficits for many years. The key concerns involve whether these deficits will decrease smoothly or abruptly, potentially causing economic turmoil. Moreover, attention is given to smaller nations and their need to possibly regulate international capital flows to avoid economic instability from rapid investment changes.
When imports exceed exports, a country experiences a trade deficit. Conversely, when exports exceed imports, it results in a trade surplus. The current account balance includes not just trade in goods and services but also net earnings on investments abroad and net transfer payments.
So, the correct answer is option c