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- If imports exceed exports, is it a trade deficit or a trade surplus? What about if exports exceed imports?Occasionally, a government official will argue that a country should strive for both a trade surplus and a healthy inflow of capital from abroad. Is this possible?What problem is most directly associated with a trade deficit? O fixed exchange rates O devaluation of a nation's currency O unemployment in import industries. O inflation
- should imports to the united states be curtailed by, say 20 perent to eliminate our trade deficit?What happens when a country's economy has a larger participation in foreign trade? It has an underlying trade imbalance. O It has a substantial trade imbalance. O It is more likely to suffer a larger trade imbalance. O It may measure its exports as a share of GDP.WHAT WILL HAPPEN IF A COUNTRY DOESNT HAVE ENOUGH PRODUCTION BUT MORE EXPORTING THINGS IN OTHER COUNTRIES
- (a) With the help of a graph, explain how the quantities of exports and imports of a country canbe determined in a two-country and two-goods world. (b) Explain with the help of a graph theeffect of an increase in the relative price of the exported good of a country on its welfare.The balance of trade show a deficit of $5000 and the value of imports are $9000what is the value of exportWhen the nation of Ectenia opens itself to worldtrade in coffee beans, the domestic price of coffeebeans falls. Which of the following describes thesituation?a. Domestic production of coffee rises, and Ecteniabecomes a coffee importer.b. Domestic production of coffee rises, and Ecteniabecomes a coffee exporter.c. Domestic production of coffee falls, and Ecteniabecomes a coffee importer.d. Domestic production of coffee falls, and Ecteniabecomes a coffee exporter.
- QUESTION 9 A trade deficit must be equivalent to domestic investment minus domestic savings. O True O FalseThe cha pter notes that the rise in the U.S. tradede ficit during the I 980s was due largely to therise in the U.S. budget deficit. On the other hand,the popular press sometimes claims that theincreased trade deficit resulted from a decline inthe quality of U.S. produc ts relative to foreignproducts.a. Assume that U.S. products d id decline in rela tivequality during the 1980s. How did this affect netexports at any given exchange mte?b. Draw a three-panel diagram to show the effect ofthis shift in net exports on the U.S. real exchangerate and trade balance.c. Is the claim in the popular press consist,:,nt withthe model in this chapter? Docs a decline in thequality of U.S. products ha vc any effect on ourstandard of living? (Hin I: Wh,:,n we sell our goodsto foreigners, what do we receive in rcrurn?)For a small, open economy when spending exceeds production then I. This country will run a trade deficit II. This country will be a net lender II. This country will export less than it imports a. Statements II and III are true O b. Statements I and III are true c. Statements I, Il and III are true O d. Statements I and II are true