A country has a trade deficit of $20 billion with its trading partners over a year. Which change would cause the country to have a trade surplus the following year, assuming everything else remains the same?A.The country decreases its imports by $10 billion.B.The country increases its exports by $30 billion.C.The country decreases its exports by $10 billion.D.The country increases its imports by $30 billion.
Question
A country has a trade deficit of 10 billion.B.The country increases its exports by 10 billion.D.The country increases its imports by $30 billion.
Solution
The country would have a trade surplus the following year if it increases its exports by $30 billion. Here's why:
A trade deficit occurs when a country imports more than it exports. In this case, the country has a trade deficit of 20 billion more than it exports.
If the country increases its exports by 20 billion deficit, but also have a surplus of $10 billion. This is because the value of goods it sells to other countries would exceed the value of goods it buys from them.
Therefore, the correct answer is B. The country increases its exports by $30 billion.
Similar Questions
Which of the following refers to the situation when a country's imports exceed its exports? Question 10Answer a. Trade deficit b. Trade surplus c. Trade advantage d. Balance of payments e. Balance of trade
The situation when a country imports more than its exports is:✓ ► A trade surplus.✓ ► A recession.✓ ► A trade deficit.✓ ► An expansion.
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
A trade surplus occurs when a country exports more goods and services than it imports.Question 37Answera.Trueb.False
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
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.