Chapter 10, Problem 7SQ

Suppose we are in Balance of Payment equilibrium with a trade deficit of 300. What happens to the trade deficit if the public sector sells 100 in securities to the foreign sector to finance the budget deficit?

Graphically, when is the balance of trade equal to zero? Multiple Choice   When the rising IM line intersects the horizontal X line.   When the rising X line intersects the horizontal IM line.   When the rising IM line intersects the horizontal axis.   When the rising X line intersects the horizontal axis.

Exchange Rate Effects on Trade Explain why a stronger dollar could enlarge the U.S. balance-of-trade deficit. Explain why a weaker dollar could affect the U.S. balance-of-trade deficit.

Suppose the US goes into a recession where the economy is not growing very quickly (or is actually shrinking) while the economies of our trading partners remain strong. What will most likely happen to our trade deficit? In your answer, explain what will happen to US exports and US imports and why.

Please define trade surplus, deficit and balance concepts. What currency strategy would you suggest to resolve a trade deficit problem? Please explain your answer with a numerical example.

If US is expected to have 12 billion dollars more export and 8 billion dollars less import. How will the trade deficit change?