Assume a small open economy's domestic output (Y) is $750 million, its domestic spending is $850 million, and total imports are $150 million. Therefore, the country runs a trade ________, and total exports are ________. a. deficit; $250 million b. surplus; $250 million c. deficit; $50 million d. surplus; $50 million
Question
Assume a small open economy's domestic output (Y) is 850 million, and total imports are 150 million. Therefore, the country runs a trade ________, and total exports are ________. a. deficit; 250 million b. surplus; 50 million d. surplus; $50 million
Solution
The country's domestic spending is more than its domestic output (750 million), which means it is spending more on goods and services than it is producing. This indicates a trade deficit.
To calculate the total exports, we need to use the formula for net exports, which is exports minus imports. In a trade deficit, net exports are negative. We can set up the equation as follows:
Net Exports = Exports - Imports
We know that Net Exports are negative because the country is running a trade deficit. We also know that Imports are $150 million. We can set up the equation as follows:
-150 million
Solving for Exports gives us $50 million.
Therefore, the country runs a trade deficit, and total exports are 50 million.
Similar Questions
Question 8 of 10A country imports goods and services worth $700 million and exports goods and services worth about $500 million. This means that the country has a(n) _____.A.trade deficitB.absolute advantageC.comparative advantageD.trade surplus
If a country’s annual imports are $500 billion and its exports are $200 billion, the difference between the two representsMultiple Choicethe budget deficit.the country’s gross domestic product.the balance of trade.the country’s capital gains.
In a small open economy, if exports equal $12 billion and imports equal $18 billion, then there is a trade____and _____ net capital outflow.A.deficit; positive.B.deficit; negative.C.surplus; positive.D.surplus; negative.
Consider the following figures: the GDP of an economy is $300 billion, household consumption is $85 billion, government spending is $140 billion, investments are $50 billion and total imports are $100 billion. What will be the value of total exports?$125 billion$75 billion$25 billion$50 billion
If GDP (measured in billions of current dollars) is $5,465 and the sum of consumption, investment, and government purchases is $5,496, while exports equal $673, imports are:
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.