Question

The U.S. economy borrowed heavily from the British in the nineteenth century to build a railroad system. Why did this make both countries better off

Short answer

Heavy interest rate lead to the improvement in both the nations.

Step-by-step solution

Step 1. Introduction

Trade refers to the exchange of goods, services and funds. In a trade transaction, both the nations are benefited by trade.

Step 2. Explanation

The U.S economy made both nations better off because the British were able to obtain high-interest rates by lending to Americans, and were thus benefited. The Americans benefited because railroads infrastructure helped in further economic growth by facilitating the transportation of goods and people.